IDG Capital has teamed up with China Oceanwide Holdings Group Co., Ltd. to acquire International Data Group, Inc (IDG), the Chinese venture firm's first limited partner and parent before its spin-out in 1999.
The acquisition, which includes International Data Corporation, IDG Communications and IDG Ventures, has received clearance from the Committee on Foreign Investment in the United States (CFIUS) and is expected to close within the first quarter of 2017.
Upon closure of the transaction, China Oceanwide will become the controlling shareholder of IDG’s operating businesses, including IDC and IDG Communications, while IDG Capital will become the controlling shareholder of the IDG venture business.
The financial terms of the deal were not disclosed, but previous media reports indicate the company was seeking between US$500 million to US$1 billion in valuation.
"Patrick always appeared so confident and optimistic about our blank performance sheet in the early years,"Hugo Shong, founding partner of IDG Capital China, wrote in an article remembering IDG's Patrick J. McGovern who passed away three years ago.
"I asked him later why he dared to bet so much capital on someone like me with zero experience. He said, because you are the guy who'd bet your youth on China's future," Shong wrote. "Twenty-four years later, we did a reverse bet on our parent's future."
In 1993, Shong, whose Chinese name is Xiong Xiaoge, returned to China after joining IDG a year prior as an assistant helping McGovern determine the group's Asia strategy. Shong founded a venture fund that year that later became IDG Capital, also called IDG Capital China previously.
Now, IDG Capital manages around a dozen U.S. dollar and RMB-denominated funds and is among the top venture firms in China, having bet on the best technology companies including Tencent's QQ, Xiaomi Inc., Ctrip, Qihoo 360, Meitu, Sohu.com and Dangdang.
The lead investor in the deal, China Oceanwide, is a privately held, multi-billion dollar international conglomerate founded by Chinese entrepreneur Lu Zhiqiang. Headquartered in Beijing, China Oceanwide's businesses range from financial services, real estate, media, technology to strategic investment, with more than 12,000 employees globally.
After the completion of the deal, IDG will continue to be headquartered in Boston, Massachusetts and managed by its current team. Kirk Campbell will continue as president and CEO of IDC, and Michael Friedenberg will continue as CEO of IDG Communications. A new board of directors will be appointed after the close of the transaction.
"In an effort to carry on the legacy of late founder and chairman Pat McGovern, we have been focused on determining the optimal future balance between what’s best for IDG and Pat’s mission for the McGovern Foundation," said Walter Boyd, chairman of IDG. "We believe China Oceanwide and IDG Capital will provide the right financial, strategic and cultural fit to take IDG to greater heights."
Founded in 1964, IDG is a media, market research and venture company that engages the most influential technology vendors and buyers.
In 1980, IDG became the first U.S. publisher to enter the China market, with the launch of China Computerworld, a China-U.S. joint venture. Today IDG China has more than 60 joint-venture magazines, newspapers and web sites for the computer, electronics, telecommunications, fashion and consumer industries.