Asian secondaries investor TR Capital has led a consortium of investors to make a $95.7-million secondary direct investment in Chinese salvage cars online auction platform Bochewang, TR Capital announced on Friday.
The secondary direct investment, which refers to the buying and selling of an investor’s ownership in a privately held company, is part of Bochewang’s VIE restructuring process, said TR Capital in a statement.
The variable interest entities (VIE) structure was created around two decades ago to circumvent Chinese rules restricting foreign investment in sensitive industries like media and telecommunications.
The structure enabled Chinese companies including Sina Corp and Sohu.com to raise overseas money via offshore listings. It has since been adopted by many more Chinese tech firms listed overseas or seeking an offshore listing.
Founded in 2014, Bochewang provides an online marketplace for sellers, primarily insurance companies, to dispose of vehicles to a nationwide pool of buyers including repair shops, vehicle dismantlers, and auto parts dealers. The Beijing-based firm claims to be China’s biggest online auction platform for salvage cars that facilitates over 75,000 transactions annually.
Before the new investment, Bochewang announced in January 2016 the completion of a Series B round at 200 million yuan (nearly $31 million) led by Chinese insurer China Pacific Insurance Company (CPIC)’s subsidiary. Its earlier investors also include alternative asset manager Sino-Ocean Capital, and China-focused PE firm New Horizon Capital, among others.
Hong Kong-based TR Capital, which invested over $45 million in the transaction, said that it plans to support Bochewang in continuing to scale its expansions and enhancing its offerings as an investor and member of the firm’s board of directors.
TR Capital focuses on providing liquidity solutions to owners of PE assets through Secondary Direct (single asset) and Fund Restructuring (portfolio) transactions. Currently managing four funds with total capital commitments of close to $1 billion, the firm targets significant positions in companies in the technology, consumer, and healthcare sectors.
Established in 2007, TR Capital has subsequently closed 36 secondary investments. It has a team of 25 professionals based in offices in Hong Kong, Shanghai, Mumbai, and Shenzhen – the firm’s fourth office that officially opened for operations this week.