Legend Star, the early investment and incubation arm of Legend Holdings, has closed its fifth RMB-denominated fund at over 900 million yuan ($123.4 million), according to an announcement on Saturday.
The new fund has roped in a slew of investors including state guidance funds, family offices, high-net-worth individuals (HNWIs), among others. Two-thirds of its existing limited partners (LPs) re-upped in the new vehicle, per the announcement.
As of September, the RMB vehicle has backed a total of 19 firms spanning new energy, semiconductor, biopharmaceutical, and healthtech, among others.
The latest vehicle comes three years after the firm closed its predecessor RMB fund at 800 million yuan ($119 million) in September 2020. The fourth RMB-denominated fund secured 25% of the corpus from its parent firm Lenovo Holdings, while the rest came from tech fund of funds (FOFs), state-owned groups, and private-owned enterprises.
So far, the firm manages as many as 11 funds investing across cutting-edge technology, telecom, media, and technology (TMT), and healthcare, with totals asset under management (AUM) of close to 5 billion yuan ($685.4 million).
Through its subsidiaries including Legend Star, Legend Holdings was the most active investor of August by deal count, raising a combined $162.3 million across nine venture deals, according to DealStreetAsia’s proprietary data.
Greater China saw a bleak VC fundraising scene in the first half of 2023, with a total of $28 billion being committed to over 199 funds, according to PitchBook’s report on Greater China’s venture activities. Both the fund count and capital raised were remarkably low compared to the record high in 2018 when $131.4 billion was committed to 1,513 funds; yet, 2023 is expected to outpace 2022 in terms of fund count and raised capital.
RMB-denominated funds rose to prop up the VC fundraising activity in the first half of this year. As a proof, only three USD-denominated funds were closed during the said period. Although US investors have historically been one of the major forces for Greater China-based general partners (GPs), heightened geopolitical tensions between China and the US have deterred GPs from taking capital from US-based LPs.
“Anecdotally, we’ve heard that some US investors have pulled back from allocating to China mainly due to geopolitical concerns and several other factors, including a Chinese economic slowdown and crackdowns on the tech sector. Moreover, Chinese GPs are more cautious in accepting commitments from US investors due to increased tensions,” the report noted.