Texas County & District backs IDG's latest China VC fund
Texas County & District Retirement System (TCDRS) has committed $30 million to IDG Capital’s latest China venture capital fund – the first to be raised since the GP acquired the global investment business of International Data Group (IDG).
A filing from last month indicated that IDG China Venture Capital Fund V had a target of $588.8 million. The firm closed its previous VC vehicle at $586 million in 2014. TCDRS didn’t participate as an LP in that fund, although it did invest $50 million in IDG China Capital Fund III, a growth vehicle raised in conjunction with Breyer Capital that closed last year at $1 billion.
IDG set up in China in 1993 led by Hugo Shong, who formed the local unit with Pat McGovern, co-founder of IDG. IDG Capital manages approximately 10 China-focused funds, covering both US dollars and renminbi. Several dollar vehicles were raised in conjunction with Accel Partners, but that partnership ended after the 2011 vintage growth and venture funds.
The firm has invested in more than 500 companies and realized 120 exits. IDG Capital said that 15 investee companies achieved valuations of $1 billion or more in 2016, taking the total number of unicorns in its portfolio to 26 over the past 12 years. There were also three IPOs and 14 M&A exits over the course of 2016, while more than 110 companies completed funding rounds.
IDG Capital’s business has broadened in scope, expanding from venture capital to growth and buyouts. Earlier this year, it teamed up with China Oceanwide Holdings Group to buy International Data Group, a transaction triggered by McGovern’s death in 2014. As part of the deal, IDG Capital assumed ownership of IDG Ventures, a global network of venture capital funds.
International Data Group served as one of multiple LPs in each entity in this network. IDG Capital sold down most of these positions – covering at least seven funds targeting India and Vietnam, as well as China – in a transaction worth nearly $600 million. The positions were bought by a syndicate of six investors led by HarbourVest Partners.
TCDRS had $26.4 billion in assets as of December 2016. Of this, $3.1 billion was in private equity, comprising $1.65 billion in buyout funds, $1.01 billion in venture capital, and $431 million in real assets. The private equity allocation target was increased to 14% from 12% during the year.
The private equity portfolio generated a return of 12.4% in 2016, trailing US equities, high-yield bonds, opportunistic credit, and master limited partnerships (publicly traded partnership interests that provide real assets exposure). The PE return on a five-year and a 10-year basis was 13.5% and 6.6%, respectively.
Last year, TCDRS committed $30 million to Joy Capital I, the debut fund raised by former Legend Capital executive Erhai Liu. Other portfolio GPs with Asia-focused funds include RRJ Capital, Baring Private Equity Asia, CDH Investments, Legend Capital, and The Carlyle Group.
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