Legend Holdings

Legend Holdings
Private
Founder Liu Chuanzhi
Headquarters Beijing, China

Legend Holdings Limited (Chinese: Lianxiang) is a Chinese investment holding company with interests in finance, real estate, and information technology, and the controlling shareholder of its better-known subsidiary, the Lenovo Group.[1] Formed by the Chinese Academy of Sciences,[2] Lenovo was originally Legend Computer, until the English name was changed in 2004. Their Chinese names however remain the same: Lianxiang.

Leadership

Liu Chuanzhi

Main article: Liu Chuanzhi

In June 2012, Liu stepped down as chairman of Legend Holdings, the parent company of Lenovo. In the years just prior to his resignation, Liu focused on improving Legend's growth, building-up its core assets, and issue a public offering of stock between 2014 and 2016. Legend's major assets include Lenovo, Legend Capital, a real-estate venture called Raycom, Digital China, and Hony Capital.[3][4]

In an interview with the BBC, Liu said that his vision for Legend is for it "to become an industry in it its own right" and that he wants it "to be become the top enterprise across industries...not only in China, but in the whole world." Liu said that he realises that his vision is extremely ambitious and may have to be left to his successors to implement.[5]

Liu said in an interview with Forbes that he hopes to diversify away from IT-related businesses and that Legend Holding's assets will be focused mainly on information technology, real estate, services, coal processing, and agriculture. He said agriculture "will become the next strategic development area for Legend Holdings." Liu says agriculture is just one part of what he sees as "huge" opportunities in sectors that cater to Chinese consumers. In the same interview, Liu said that Legend's focus will continue to remain on China. "Whatever we do has to fit into something we are doing in China," said Liu when referring to plans for overseas investment.[4] Liu said in July 2012 that he plans to take Legend Holdings public with a listing in Hong Kong. Forbes speculated that Liu may be trying to "create a Chinese version of General Electric." [6]

Stock offering

As of March 2015, Legend Holdings planned an initial public offering for July of that year to raise about HK$23.4 billion. The firm worked with UBS and China International Capital to submit its IPO application to Hong Kong regulators.[7]

Subsidiaries

Joyvio

Joyvio is Legend Holdings' vehicle for investment in the food industry. Legend has invested more than 1 billion yuan in Joyvio. Joyvio will pursue complete vertical integration from farming all the way to retailing. Joyvio's first product was blueberries. In November 2013, its product range was expanded to kiwifruit. The kiwifruit has been branded "Liu Kiwi" in honour of Liu Chuanzhi. Liu is responsible for Legend's move into food. Since 2011 Joyvio has been acquiring farms around the world including blueberry farms in Shandong and Chile and kiwifruit farms in Sichuan, Shaanxi, Henan, and Chile. The firm has plans to start selling cherries and grapes from the United States, Australia, and Chile by the end of 2013.[8]

Joyvio has taken advantage of Legend's experience in information technology to set up a tracking system to ensure the quality and safety of its products. Customers can scan codes on its packages in order to find out what farm the product came from, who supervised production, what tests were performed, and information on the soil and water quality. The company is also applying the original design manufacture business model common in the technology industry in order to work effectively with small family farms and agricultural cooperatives. Joyvio holds training exercises with farmers in order to prepare them to deal quickly and effectively with bad weather.[8]

Joyvio announced on 30 March 2014 that it had acquired a 60 percent share of Hangzhou Longguan Tea Industrial Company for roughly 30 million yuan or about US$4.83 million. Longguan was previously a fully state-owned enterprise operating under the jurisdiction of the Chinese Academy of Agricultural Sciences. Longguan produces Hangzhou's famous Longjing tea. The company had sales of 32.45 million yuan in 2012. According to the company's annual report is has been growing 40 to 50 percent per year. Joyvio has taken over day-to-day control of Longguan. Liu Chuanzhi said he aims to bring innovation and commercial methods to the tea industry. Liu said that Joyvio would invest in other well-known tea brands and related products.[9]

iByer Dental

In 2014 Legend invested 1 billion yuan (US$160 million) in iByer Dental, a twenty-year-old chain of dental clinics,“to help iBYER Dental to join premium dental brands in the country.”[10] As of July 2014, Legend planned to double iByer's size to 200 locations over three years. Legend's move into healthcare was facilitated by recently implemented healthcare reform legislation designed to encourage private investment. Legend said it expects healthcare spending in China to triple to US$1 trillion by 2020 due to an aging population, an increase in non-communicable diseases acquired through lifestyle, and an increased interest in health due to higher incomes. China has the lowest number of dentists per capita among the G20.[11]

Legend Star

Legend Star began as a joint venture between Legend Holdings and the Chiense Academy of Sciences in 2008. Since that time, Legend Star has become a full-stack early stage investment firm focusing on the commercialization of technology, with roughly 200 portfolio companies spread across a range of sectors. Legend Star also operates a training program for entrepreneurs (typically CEO's of venture-backed technology startups) and has graduated around 600 alumni in its 7 years of operation.[12][13]

Lenovo

Main article: Lenovo

Legend Holdings is the largest shareholder of the personal computing company, Lenovo Group, holding 30.6 percent the company’s stake. According to Legend’s website, in 2013 they made US$39.0 billion and total assets equated to US$33.1 billion.[14] Lenovo Group Ltd was formerly known as Digital China, created by Legend Holdings. As Digital China, the Matthews China Fund, “founded in 1998 and is known to invest four-fifths of its assets in Chinese companies”[15] sold 2,843,000-share stake in Digital China for an average price of HK$6.91 per share. “That transaction had a -0.24% impact on the Fund’s portfolio.”[15] Now Lenovo is the Fund’s 10th largest portfolio. When the Fund sold 7,176,000 shares of Lenovo Group Ltd, for an average of HK$10.83, they took an -1.01% hit on their portfolio[15]

According to news reports, Legend is now working with China International Capital Corp and UBS AG on a $3 billion initial public offering (IPO) in Hong Kong for the second half of 2015.[16] Legend Holding is estimated to make US$2 billion to US$3 billion with the deal.[17]

Peer-to-peer lending

In 2014, Legend expanded into peer-to-peer lending and other forms of finance. In September 2014, Legend invested in Yindou. The next month Legend invested in Eloancn, China's first peer-to-peer lending platform. Eloancn has established 1,000 locations in 100 Chinese cities. As of August 2014, Eloancn was facilitating 200 million yuan of loans per month. In a statement Eloancn said that it considered Legend a "strategic investor" and hoped to benefit from Legend's expertise in information technology, management, and marketing.[18]

Other subsidiaries

Other major subsidiaries are Legend Capital, Raycom Real Estate Development Co. Ltd. and Hony Capital. Legend Holdings injected originating capital into the Hony Capital Group, a pioneer in China’s home grown private equity industry with approximately US$4.4 billion under management.[19]

References

  1. "Legend’s five subsidiaries are full steam ahead..."
  2. Company profile
  3. Andrew Nusca (18 June 2012). "Lenovo founder steps down as president". ZDNet. Retrieved 12 July 2012.
  4. 4.0 4.1
  5. Rochan, M (16 March 2015). "Lenovo's top shareholder Legend Holdings seeks $3bn Hong Kong floatation". International Business Times (United Kingdom). Retrieved 7 April 2015.
  6. 8.0 8.1
  7. "China Dental Industry Report, 2014-2018". Market Watch. 2015-03-02. Retrieved 2015-03-11.
  8. http://www.legendstar.com.cn
  9. http://www.lstar.vc/#!history/c1ppg
  10. "Legend Holdings, largest Lenovo shareholder, seeks HK IPO". The Daily Telegraph. 2015-01-20. Retrieved 2015-03-11.
  11. 15.0 15.1 15.2 Goodloe, David (2015-03-05). "Matthews China Fund Reverses Approach, Sells Several Asian Stocks In Fourth Quarter". Guru Focus. Retrieved 2015-03-12.
  12. Barreto, Elzio (2015-01-18). "Lenovo parent Legend Holdings plans up to $3 bln H2 2015 HK IPO - IFR". Reuters. Retrieved 2015-03-11.
  13. "Legend Holdings, largest Lenovo shareholder, seeks HK IPO". The Daily Telegraph. 2015-01-20. Retrieved 2015-03-11.
  14. Alois, JD (12 January 2015). "Lenovo is Expanding into Peer to Peer Lending". Crowdfund Insider. Retrieved 12 January 2015.
  15. Hony Capital

External links