HarbourVest leads China GP-led on Baidu, Tencent backer

IDG Capital, which has $20bn in assets, is understood to have run a novel yuan-to-dollar secondaries process advised by Lazard.

IDG Capital has carried out a novel yuan-to-dollar restructuring that could pave the way for others.

The $20 billion Beijing-headquartered general partner sold the remaining assets in a mature yuan-denominated fund into a dollar-denominated vehicle, according to three sources familiar with the matter. The deal was backed by a group of investors led by HarbourVest Partners and including LGT Capital Partners, according to two of the sources.

The net asset value of the portfolio is more than $600 million, Secondaries Investor understands. HarbourVest accounted for “substantially more” than $200 million of the deal, it is understood.

Lazard advised on the deal, the sources said.

The deal was done through a Qualified Foreign Institutional Investor structure, an onshore entity that allows select foreign institutional investors to buy shares on Chinese stock exchanges. This is the first time this structure has been employed in a GP-led secondaries deal, Secondaries Investor understands.

“Usually the underlying companies have to change their corporate structure in order to take US dollars and to be able to go into a US dollar fund and that is very difficult for a GP to orchestrate,” said a source with experience working in China.

The name of the fund and the pricing is not clear.

IDG has backed some of China’s most successful businesses including technology companies Baidu and Tencent, according to its website. HarbourVest bought a portfolio of stakes from the firm in 2017, according to one Hong Kong-based source. It is unclear if LGT is an existing LP with the manager.

Loyal Valley Capital and Kinzon Capital are among GPs that have carried out yuan-to-dollar restructurings, as Secondaries Investor reported.

Asia accounted for 3 percent of secondaries deal volume in the first half of this year against 6 percent in the first half of last year.

Lazard and LGT declined to comment. IDG and HarbourVest did not return requests for comment.