The Hong Kong Venture Capital and Private Equity Association (“HKVCA”) has announced that Eric Mason has been elected Chairman of the Association, effective 21 August 2015. He succeeds Conrad Tsang who had been Chairman since 2013.

Mr. Mason, who brings to the role of Chairman more than 20 years of investment experience across a wide spectrum of industries, said: “I am delighted to be taking the chair of the HKVCA at such an important time for the venture capital and private equity industry in Hong Kong. As an organization we continue to build exponentially on the progress of the last few years.”

“With a membership of over 320 firms, we remain fully committed to growing and expanding the diversity of our member base, in Hong Kong and across the Asia Pacific region,” Mason said. “We will continue working to support and protect the interests of the private equity and venture capital community, providing a value added networking environment as well as lobbying the government on behalf of our industry in particular and on behalf of the financial services sector in general. In this way we positively impact the region’s regulatory and business environments, and help attract more GPs and LPs to set up in Hong Kong.”

Conrad Tsang, the HKVCA’s outgoing Chairman added: “I am gratified to report that, during my two years as HKVCA chairman, we sought to increase the Association’s public profile and made great strides in terms of developing our own research capabilities. I am especially pleased about the recent passage of the bill extending the profits tax exemption for offshore funds to private equity funds. ”

“I congratulate Eric on his election and am sure that he will bring his considerable energy and experience to bear in helping the HKVCA achieve more growth and success in the future.”

In addition to electing Mr. Mason as Chairman at the HKVCA’s AGM on 21 August, the members elected the following officers and board members: Vice Chairmen: John Levack and Joseph Wan; Presidents: Johnny Chan, Vincent Chan, K. O. Chia and Conrad Tsang; Secretary: Lucian Wu; Treasurer: Alain Fontaine; Executive Directors:, Varun Bery, Jie Gong, Melissa Guzy, Alvin Lam, Gabriel Li, David Pierce, Siddharth Sharma, Derek Sulger, Denis Tse, Steve Wang, Craig Wilkinson and Rebecca Xu; and Non-Executive Directors: Peter Chen, H. Chin Chou and Marvin Lai.
      
View Chairman's message by Eric Mason here.
        

Jie Gong, Partner, Pantheon Ventures (HK);  Chairman,  HKVCA ESG Committee

Fiona Reyolds,  Managing Director,  Principles for Responsible Investment

  
ESG (environmental, social and corporate governance) was the subject of a recent co-hosted workshop by the Hong Kong Venture Capital and Private Equity Association (HKVCA) and the United Nations-supported Principles for Responsible Investment (PRI). The workshop highlighted the opportunities and challenges of integrating ESG into private equity (PE) practices in Asia, and this article sheds more light on the subject from two of its leading proponents, Jie Gong, Partner at Pantheon Ventures, and Fiona Reynolds, Managing Director of the PRI.

Gong, who is Chairman of HKVCA’s recently established ESG Committee, said that she was pleased to see growing interest in ESG among Asia’s general partners (GPs), even though some of this interest has been in direct response to limited partners’ (LPs) demands. Notwithstanding that, “, The level of awareness as well as the degree of implementation of ESG still lags in Asia when compared with the more mature PE markets,” she said.

Reynolds highlighted three specific drivers that are behind the integration of ESG considerations into investment practices. First, the increasing regulatory focus, which is lending weight to awareness of the ESG risks that can threaten long-term PE investments. Second, the growing recognition that negative ESG performance can damage exits if companies cannot meet the increasingly higher standards of large trade buyers and local stock exchanges. And third, as Reynolds explained, is the rise of investor expectations.

“Of 286 asset owner signatories to the PRI, over 170 allocate capital to PE managers. More than 70 percent of our LP signatories are integrating ESG into the selection, appointment and monitoring of their PE managers. This group of LPs is predominantly European and Australian, with growing interest in the Asian asset owner community. The PRI has been particularly encouraged by recent public commitments to ESG integration and stewardship engagement from LPs such as Temasek and GPIF”, Reynolds said.


“There are, of course, challenges, the biggest of which is communicating the business case for ESG integration into Asian PE, protecting and unlocking value that  will ultimately help to maximize exit opportunities. GPs in Asia are often working from minority control positions and their biggest challenge is getting company management buy-in. They have to be able to justify why the management of ESG issues, and the associated cost, should be a priority”, Reynolds said.

Gong added that some Asian GPs view ESG as a compliance issue and as such take a tick-the-box approach.  “At Pantheon, we see ESG as an important tool for value creation, with broad application in areas directly contributing to PE returns, for example, product quality, branding, human resources, and operational efficiency.  Furthermore strong ESG enhances an exit valuation.  Once PE managers are aware of the full breadth of positive value creation enabled by ESG, they are far more likely to embrace it”, she said.

At the HKVCA-PRI ESG workshop in June, it was clear from those attending that GPs need access to strong local knowledge and expertise to help them identify and manage ESG risks and opportunities in their investments. The workshop also highlighted a need for GPs to follow a structured approach towards monitoring ESG developments at the company level so that they can report progress back to LPs and other stakeholders - this may also prove useful at exit if asked to demonstrate historical management of ESG issues.

According to Gong, there are many best practices in the area.  Guided by these best practices, building ESG components into an investment and monitoring process is relatively straightforward. What takes effort and persistence is for GPs to permeate an ESG culture among their investment teams, so that team members are strong advocates of ESG practices to existing and prospective companies on a continuous basis. 

Reynolds said that while LPs recognize that many GPs have historically included environmental and social impact analysis in their investment activities, LPs need assurance that their GPs have a comprehensive and structured approach to identifying and managing ESG risks and opportunities. “Signatories to the PRI are provided with a framework to develop and demonstrate this approach. The PRI is also dedicated to providing resources to signatories to help them with this process. The PRI Guide for General Partners offers guidance on how to integrate ESG factors into PE investment activities, linking this with organizational governance, structure and culture,” Reynolds explained.

HKVCA decided to promote ESG in the region. “With a broad set of GP and LP members, the HKVCA is in an advantaged position to help raise the level of awareness on ESG and spread the best practices, through classes, seminars, conferences as well as endorsement on strong ESG achievements in Asia,” Gong said. The aim of ESG committee is to bring dedicated efforts towards the advocacy of this important issue.
     

Asia Climate Partners