The 13th China Private Equity Summit & the 1st Hong Kong Venture Capital Forum Successfully Held
June 13, 2014

Hong Kong, 13 June 2014 – The 13th China Private Equity Summit and the 1st Hong Kong Venture Capital Forum, organized by the Hong Kong Venture Capital and Private Equity Association (“HKVCA”), took place today. Attracting more than 450 venture capital and private equity practitioners, leading corporations, and other industry professionals and participants from across the region, the summit discussion focused on the latest developments and trends in the private equity market in China.

Held at the Hong Kong Convention and Exhibition Centre, distinguished guests at this one-day event included: Professor K C Chan, Secretary for Financial Services and the Treasury of Hong Kong SAR Government; Antony Leung, Chief Executive Officer of Nan Fung Group; Bryan Chan, Managing Director and Co-Head of the Equities and FIC Business, Global Market Division of Hong Kong Exchange & Clearing, and Chief Executive of China Exchanges Services; Fred Hu, Chairman of Primavera Capital Group; Hans Tung, Managing Partner of GGV Capital and Gavin Ni, Founder, Chairman and Chief Executive Officer of Zero2IPO Group.

The China Private Equity Summit explored GP and LP perspectives on the China private equity environment, regulatory developments, as well as due diligence and risk management in China. Other topics included value creation within portfolio companies, RMB funds, Chinese overseas investments, and exit channels for Chinese portfolio investments.

During the Hong Kong Venture Capital Forum, experts from the VC industry, NGOs, and the private sector explored three key topics: mobile internet, opportunities and challenges for venture capital in Hong Kong, and opportunities in Asia beyond China.

Conrad Tsang, Chairman of HKVCA, said: “The event has once again brought together distinguished guests and industry experts to discuss the multiple challenges and opportunities for private equity and venture capital firms in Asia today. As the industry matures in the region, and as one of the largest associations of our kind, we will continue to represent the opinions of our members, in order to embrace the economic and regulatory challenges that lie ahead.”

Media Coverage can can be viewed here.

Photo Highlights can can be viewed here.

Technical Update – Feedback on the current ‘Challenges’ to PE firms from a tax, legal and regulatory perspective
April 30, 2014

In a brownbag luncheon presentation titled “Two-way Communication” held on Wednesday 30 April, Technical Committee Chairman John Levack gave members feedback on the issues being discussed in the committee and addressed some of the current challenges to PE firms from a tax, legal and regulatory perspective.

Launched in April 2012, the technical committee has three key objectives:

• Communicating with HKVCA members on legal and technical matters which affect them, their investors and their portfolio companies;
• Shaping policy and the implementation of policy to ensure that it accommodates the needs of Hong Kong’s venture capital and private equity community; and
• Raising the profile of the industry and its concerns with regulators, influencers and other key industry bodies.

Levack outlined the major projects the committee is currently involved in, namely: liaising with the Hong Kong Government on a roadmap for bringing funds and GPs onshore in Hong Kong; establishing a working group with the SFC to improve the regulatory framework for PE firms in Hong Kong; a study with Hong Kong University of Science & Technology of indirect job creation resulting from PE and hedge funds, and a survey of PRC fund strategies; and sub-committee work related to redrafting the Limited Partnership law in Hong Kong and the carried interest taxation working group.

To make progress on these issues, the technical committee is working with government, regulators and the private sector. Specifically, issues discussed with the Securities and Futures Commission (SFC) include: whether the SFC should regulate private equity; the variable application of Type 1, Type 4 and Type 9 licenses; the monitoring of PE activity - FRR and inspections; and registration for offshore funds tax exemption.

With the Inland Revenue Department, Levack said that the technical committee is discussing several issues, including: the implementation of offshore funds tax exemption and the inclusion of HK SPVs; benefit of China-Hong Kong double tax treaty to Hong Kong-based investment vehicles; onshore funds – central management and control; and Singapore structures.

As a fund hub, Levack noted that for Hong Kong to be successful, it must have all the essentials – tax transparency of Hong Kong funds; clarity, certainty and consistency of tax for manager (Hong Kong) and team members; and double taxation agreements with key investment destinations. But it faces issues: regulation; the limited partnership law needs upgrading; and tax specifically with regards to carried interest and the profits tax of the manager.

In summary, Levack noted that the technical committee comprised a pooled resource of industry and professional advisers who are creating an awareness of new technical issues, formulating responses and proposals for change, and communicating with members and external parties. He concluded by emphasizing the importance of a two-way flow of information between the technical committee and HKVCA members.

Please download the presentation here.

HKVCA Publishes 2014 Report on Hong Kong’s Venture Capital and Private Equity Space
June 13, 2014

The HKVCA report examines the local venture capital industry, listing the most active VCs in Hong Kong by number of deals and in particular takes note of the re-emergence of home-grown venture firms. Red Chapel Advisors tops this list.

Hong Kong ecosystem directory, StartBase.HK, was also mentioned in the report as an important example of a grassroots, open source, startup profiling database that has helped reduce search costs and improved deal information flow.

The report also provided data on private equity deal value in Hong Kong through 2014, though cautions that the deal value reported will be skewed by Temasek’s US$5.7 billion privately-negotiated investment in AS Watson earlier this year.

Deal value over the past three years has hovered between US$1.2 billion and US$1.8 billion. Indeed venture deals within Hong Kong are expected to experience an upswing in 2014, despite the fact that the data will not include those projects receiving incubation funding by the Government.