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Secondary private equity finds its feet in China

It’s an asset class that took years to establish itself in China and Asia. But investors are turning their attention to an asset class that promises chunky returns without the risk borne by primary buyout funds.


TR Capital, a Hong Kong firm specializing in the niche world of Asian secondary private equity, timed the launch of its latest fund well. It closed TR Capital IV at the end of 2020, over-subscribed and with $350 million in commitments from limited partners (LPs), and immediately started to put its money to work.

Its first big transaction, involving the acquisition of $100 million in assets managed by Beijing-based Kinzon Capital, was completed in March 2020, just as Covid was starting to shake the west’s economic foundations.

The deal involved the restructuring of six Kinzon assets, including XPeng Motors, a maker of smart electric cars from Guangzhou often described as ‘China’s Tesla’, from a renminbi fund into an US dollar offshore structure.

Frederic Azemard, a partner at TR Capital, describes the process as: “More than six months of hard work. These are complex deals to put together and underwrite.” Working with the firm’s onshore China team, Azemard says he “cherry-picked” the best firms in Kinzon’s portfolio and bought them at an attractive price.

He had three main aims in mind. Each target needed to have an international shareholder base. It had to aspire to listing shares offshore, probably in Hong Kong or the US.

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