Legend closes China healthcare continuation fund

Last year, Legend completed a full restructuring of its 2008-vintage fourth fund, which saw 12 assets transferred into a new vehicle backed by Hamilton Lane. The latest transaction involves Funds V and VI, which closed in 2011 and 2014 on $515 million and $500 million, respectively.

While the firm began investing in healthcare through Fund IV, the sector exposure was limited, according to a source close to the situation. It began to ramp up over the next two cycles, with healthcare accounting for roughly one-third of the Fund VI corpus. A first dedicated healthcare vehicle closed at $250 million in 2015. A second closed last year with commitments of $230 million.

Funds V and VI have reached the end of their investment periods and are performing strongly, with technology, media and telecom (TMT) assets driving most of the value, the source added. The healthcare portion includes companies that will likely require further funding before they are ready for a liquidity event. Additional capital was required to participate in these rounds and avoid dilution.

"The deal … helps enhance liquidity of existing fund investors, and also demonstrates the confidence of secondary investors in the quality and growth potential of our portfolio assets as well as our post-investment management capabilities. The fund allows longer runway for our portfolio companies, where we can support them to grow into industry leaders and assist them in accessing the public markets,” said Jafar Wang, co-CIO of Legend, in a statement.

The firm claims to have invested $1.7 billion in healthcare since 2007, with 20 portfolio companies going public across pharmaceuticals, biotechnology, medical devices and diagnostic technologies, and services and digital healthcare. Distributions from healthcare investments over the last three years also total $1.7 billion.

Legend has more than $9 billion in assets under management in US dollar and renminbi-denominated funds. With the launch of the first healthcare fund, the firm’s flagship US dollar VC vehicles have focused solely on TMT. Fund VIII closed late last year at the hard cap of $500 million.

A growing number of Asian private equity firms are said to be exploring continuation vehicles as a means of making distributions to LPs while securing additional time and capital for assets they believe need more time to realize full value. Other GP-led options seen in the market include single-asset lift-outs, portfolio strip sales, and tail-end restructurings.

“The private equity secondary market in China has continued to grow and evolve rapidly in the last few years and we look forward to exploring more interesting and innovative secondary transactions going forward," said Mingchen Xia, co-head of Asia investments at Hamilton Lane.

Lazard was the sole financial advisor on the creation of LC Healthcare Continued Fund I. Gibson Dunn acted as the legal counsel for Legend, while Ropes & Gray worked with Hamilton Lane and Coller.

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• Topics
• Greater China
• Secondaries
• Secondaries
• Healthcare
• China
• Legend Capital
• Coller Capital
• Hamilton Lane
• Secondaries