April 14, 2017 / 8:08 AM / 3 years ago

IDG Capital to deploy more resources in firms, eyes tech assets

BEIJING (Reuters) - IDG Capital, a private equity and venture capital firm, will deploy greater resources and time in companies as they grow, in contrast to some quick exits in the past, Global Chairman Hugo Shong told Reuters in an interview.

Hugo Shong, IDG Capital Global Chairman, at IDG headquarters in Beijing, China, August 21, 2015. REUTERS/Stringer

IDG Capital, which together with China Oceanwide Holdings Group recently bought tech publisher International Data Group for an estimated $1.5 billion, will also look to increase and extend its investments in telecoms, financial technology and advanced manufacturing, Shong said.

The firm presently manages more than 10 funds and has assets under management estimated at over $7 billion. It completed 17 exits, including three IPOs and 14 strategic sales, last year.

“In the past, we made some mistakes and sold too early, because our initial fund size was too small,” said Shong. “(If) you don’t have money to follow on, you can only exit.”

Finding talented managers is always challenging, Shong said.

It is hard to find “entrepreneurs who can run a scalable business ... some entrepreneurs at the early stage are pretty good, but once you get to the size where you’re managing 2000 people it can get tough”, he added.

Shong did not provide any details on fundraising plans.

He said “mobile remains a core focus” for the firm.

IDG Capital’s portfolio includes Meitu Inc, a mobile hardware and app maker that raised HK$4.88 billion ($623 million) at its December IPO, Internet search behemoth Baidu Inc and smartphone maker Xiaomi Inc [XTC.UL].

Its recent investments include online game developer Gbits Network Technology, interactive social video platform Tian Ge Interactive Holdings, and CreditEase, a wealth and credit management firm and parent of Yirendai, an online consumer finance marketplace.

The International Data Group buyout, which closed in March, gave IDG Capital control of the firm’s venture investments in companies spanning the United States, South Korea, India and Vietnam.

The deal also provided China Oceanwide, a real estate and financial holdings conglomerate headed by tycoon Lu Zhiqiang, control of International Data Group’s publication assets, such as Computerworld magazine, and market researcher IDC.

Shong said the buyout was an “emotional” decision, following a promise made to International Data Group founder Pat McGovern before his death in 2014 to maintain his businesses and philanthropic legacies.

McGovern provided the funding to establish the McGovern Institutes for Brain Research at MIT and in China.

IDG Capital’s partnership with China Oceanwide came together following a friendly lunch in Beijing during the bidding process after each had submitted a separate offer, Shong said.

Hugo Shong, IDG Capital Global Chairman, attends an event in Beijing, China, December 1, 2013. REUTERS/Stringer

IDG Capital also has many industrial technology investments. In March, it and other Chinese investors completed the buyout of Ledvance, an LED maker, from Munich-based lighting group Osram GmbH for 500 million euros ($531 million).

($1 = 0.9422 euros)

($1 = 7.7730 Hong Kong dollars)

Reporting By Matthew Miller; Editing by Himani Sarkar

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