Legend closes eighth China VC fund on $500m

LC Fund VIII was launched earlier this year with a target of $450 million, roughly the same as raised in the previous vintage. The firm claims to have received strong support from existing LPs while diversifying its investor base. Commitments came from sovereign wealth funds, private pension funds, corporates and family offices in the Middle East, Europe, and Asia.

The strategy remains investing in technology, media and telecom (TMT) and consumer companies, with an emphasis on enterprise services, advanced manufacturing and deep technology, as well as consumer-facing internet. Meanwhile, Legend is seeking $250 million for a healthcare fund. The firm started investing in healthcare in 2007 through its fourth US dollar fund and closed its first vehicle dedicated to the sector in 2015 at $250 million.

More than $9.1 billion has been committed to US dollar China venture capital funds so far this year, up from $7.4 billion for the entirety of 2019. Sequoia Capital China, Qiming Venture Partners and Gaorong Capital have all closed funds of $1 billion or more, while there have been smaller closes for younger spin-out GPs such as China Creation Ventures, M31 Capital, Sherpa Healthcare Partners, and Vitalbridge Capital. 

Legend was established in 2001 when Chuanzhi Liu, president of Legend Holdings, brought in Linan Zhu to launch an investment business. Legend Holdings provided the entire $35 million corpus for Fund I, which generated a 10x return. The firm is now an independent subsidiary under Legend Holdings. Capital has been raised from third-party sources since Fund II, though the parent remains an LP. 

The Fund VIII close takes its assets under management to approximately $8 billion across nearly 20 US dollar and renminbi funds. The first local currency fund was launched in 2007. The remit has traditionally been wider in terms of sector but focused on growth capital rather than early-stage deals. Legend closed its fifth flagship renminbi fund at RMB7 billion in 2019.

Legend also has a joint venture semiconductor fund with SK Holdings, which is run by a separate team. It is part of a broader partnership with the Korean company that includes a separate account, which has made commitments to the TMT and healthcare funds and participates in co-investment.  

The separate account structure is open to other LPs, chiefly as a means of making Legend relevant to institutional investors whose minimum commitments are too large for individual funds. The pitch is they get to align themselves with a mature, multi-strategy platform; co-investment and even access to direct deals outside of the funds come as part of the package.

Earlier this year, Hamilton Lane led a $200 million restructuring of a Legend’s fourth US dollar VC fund, which closed in 2008 with commitments of $350 million and was due to reach the end of its life in April of this year. The deal involved transferring 12 investments into a new vehicle as a means of extending the holding period. The vehicle has a five-year lifespan.

Legend claims to have invested in more than 500 companies to date, securing 70 IPOs and 60 trade sale exits. It has 60 investment professionals based in Beijing, Shanghai, Shenzhen, and Hong Kong, plus a 15-person in-house consulting group.

Atlantic-Pacific Capital served as placement agent for LC Fund VIII.

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• Topics
• Greater China
• Fundraising
• Venture
• Technology
• China
• Legend Capital
• TMT