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The Tipping Point
Asian private equity continues to grow but for Chin Chou the best is yet to come as more and more institutions look to Asia as an investable market
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Based in Hong Kong from where all the firm’s pan-Asia business is managed, Chin Chou, Chief Executive Private Equity Asia, Morgan Stanley, noted the city’s ease of doing business from a regulatory perspective, its pro-business government and the support of the Hong Kong Venture Capital and Private Equity Association (HKVCA) as key reasons why Hong Kong remains a “terrific place to do business”. |
And although the fund raising environment in Asia has proven to be tough, the firm has had success with its number four fund, which closed above target in the middle of 2014. “What always encourages me with Asia and Asian private equity is that every year there are new limited partners of established institutions who look to Asia as an investable market. So although it’s a little tough from a macro point of view, there is secular growth in this business and we are always pleased to speak with new LPs interested in Asia,” he said.
Indeed, raising funds on a global scale means that Chou meets LPs from a broad mix of markets including the firm’s traditionally largest market, the US, and its fastest growing, the Middle East.
“For our fourth fund, the Middle East and the US were very close in terms of being the joint largest providers of capital. And we were very pleased this year with Europe as it ended up being almost 20% of our fund,” he said.
Morgan Stanley’s long and successful track record in China, its core investment destination, also puts it at the “coalface” in terms of seeing the country’s economic development and how that affects the firm’s strategy there. Chou said that he remained optimistic for China’s growth and the opportunities that will provide for private equity.
“Recent news reports have highlighted that China’s growth in 2014 was only 7.4 percent. But against a US$6 trillion economy that is US$400 billion incremental economic growth last year, and I like that! I like China even more when the macro people start saying negative things about it because the entry values become a bit more rational. When everybody loves China, to be honest it’s a tough place to invest.”
Outside of China, what other Asian markets is Morgan Stanley eyeballing to expand its private equity throughout the region? “Korea is our next important market”, says Chou, where they have been completing buyouts at a rate of about a deal a year.
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HKVCA 12th Annual Golf Day 2015 |
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HKVCA Golf Day Tees Off
April 24, 2015
Group Photo
Sponsors and the HKVCA Golf Organizing Committee
The 12th annual HKVCA Golf Day, on Friday, April 24, 2015, was a huge success with 66 enthusiastic golfers, a record number, teeing off in 18 flights under blue skies and warm sunshine. Under the sunny day, players were able to enjoy a great lunch after completing their rounds. We would like to thank our generous sponsors, namely Platinum Sponsors Citi and Morgan Stanley; Gold Sponsors Ernst & Young, UBS, Lexington Partners and Debevoise & Plimpton; Breakfast Sponsor Aon and Wine Sponsor BlackPine. We would also like to thank the Golf Committee and everyone who participated for contributing to the success of this popular annual event. And don’t forget to save the date for next year’s Golf Day on Friday, 4 March, 2016!
View Photo album here
Results:
| Team Winners |
Team 1st Runners-up |
Team 2nd Runners-up |
| Vikram Malhotra |
David Hui |
Robert Keys |
| Ravi Mehrotra |
John Lee |
Paul Walters |
| Sunil Chandiramani |
Kirk Beaton |
Colin Lunn |
| Ashwan Malhotra |
Jake Astor |
Greg Lapham |
| Longest drive: |
David Hui |
| Nearest the pin: |
Scott Campbell |
| Individual net winner: |
Tim Harrison |
| Individual gross winner: |
Andrew Ross |
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Upcoming Events |
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Last Call for Early-Bird Rate until Apr 30
| Date: |
June 1, 2015 (Mon) |
| Time: |
09:00 - 17:30 followed by cocktail reception |
| Venue: |
N201, Hong Kong Convention and Exhibition Centre |
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Fee:
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Early-bird Rate (Deadline: 30 April 2015)
- Full member or Limited Partners: one free pass per company
- Full member/Limited Partners (additional pass) or
Associate or Overseas Member: HK$2,800
- Non-member: HK$4,800 per person |
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Standard Rate
- Full member or Limited Partners: one free pass per company
- Full member/Limited Partners (additional pass) or
Associate or Overseas Member: HK$3,800
- Non-member: HK$5,800 per person |
| Website: |
cpes.hkvca.com.hk |
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| CPT: |
6.5 points |
 
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Protecting Brand and Reputation During a Crisis
Sponsored by: 
- The importance of handling communications well during times of crisis
- Practical tips on effective preparedness and contingency planning prior to a crisis taking place
- Insight on how to most effectively handle communications should a crisis actually occur
- Case studies to provide guidance on how to communicate with various stakeholders, help maintain credibility, and minimise potential damage to reputation during times of crisis
Speaker:
Cara O’Brien, Senior Managing Director, FTI Consulting
Full speaker's bio can be downloaded here.
| Date: |
May 11, 2015 (Mon) |
| Time: |
12:30 - 14:00 |
| Venue:
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The China Club, 14/F, The Old Bank of China Building,
Bank Street, Central, Hong Kong |
| Fee:
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Full member: one free pass per company
Full member (additional pass)/Associate member: HK$450
Non-member: HK$800 per person |
| CPT: |
1 point |
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Limited Seats Available
Sponsored by: 
| Date: |
May 8, 2015 (Fri) |
| Time: |
08:00 - 09:00 |
| Venue:
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Victoria Suite, Hong Kong Club, 1 Jackson Road, Central, HK
(Room reserved under the name of Johnny Chan) |
| Fee: |
Full member (corporate): one free pass per company |
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Full member (additional pass)/ Associate member: HK$280 |
| HKVCA Members Only |
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Three Shades of White
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| Date: |
May 18, 2015 (Mon) |
| Time: |
18:30 - 20:30 |
| Venue:
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Hong Kong Club, 1 Jackson Road, Central, Hong Kong
(Room reserved and hosted by the name of Marcus Thompson) |
| Fee:
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HKVCA member: HK$450 per person
Non-member: HK$900 per person |
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HKVCA is co-hosting a workshop with the PRI to explore the relevance of environmental, social and governance (ESG) issues to private equity (PE) investments in Asia. Attendees will be provided with an overview of how ESG issues can be integrated within PE investment processes. They will then have the opportunity to discuss practical applications to Asian investments through a multi perspective panel dialogue and an interactive case study workshop. Please click here for more details
| Date: |
June 12, 2015 (Fri) |
| Time: |
12:00 - 14:00 |
| Venue:
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The China Club, 14/F, The Old Bank of China Building,
Bank Street, Central, Hong Kong |
| Fee: |
Free for full member |
| CPT: |
1.5 point |
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Hong Kong Broadband Network – From MBO to IPO in < 3 years.
- Building trust to achieve Win-Win-Win for seller, PE and professional managers
- Clear alignment of interest via unique Co-Ownership structure
- Leveraging the resources of a global private equity firm
- IPO engagement started the day after MBO
Full speaker's bio can be downloaded here.
| Date: |
June 15, 2015 (Mon) |
| Time: |
12:00 - 14:00 |
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Venue:
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The China Club, The Old Bank of China Building,
Bank Street, Central, Hong Kong |
| Fee:
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Full member: one free pass per company
Full member (additional pass)/Associate member: HK$450
Non-member: HK$800 per person |
| CPT: |
1.5 point |
_________________________________________________________
Save the Date
*Topics include:
- Early stage investment
- Module 1: PE basics
- Module 2: The investment decision
- Module 3: Transaction documentation
- Module 4: Post investment
- Module 5: LP universe & fund raising
- Case Study: Pacific Coffee
- Case Study: GE Equity
| Date: |
Sep - Oct, 2015 (date to be confirmed) |
| CPT: |
3 points per module, 1.5 points per case study |
*The above information is subject to change until final confirmation.
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Save the Date
| Date: |
Jan 19, 2015 (Tue) |
| Time: |
18:30 - 21:30 |
| Venue: |
The Hong Kong Country Club |
_________________________________________________________
Save the Date
| Date: |
Jan 20, 2015 (Wed) |
| Time: |
8:30 - 17:30 (followed by cocktail reception) |
| Venue: |
S421, Hong Kong Convention and Exhibition Centre |
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New Members Welcome
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Full Members
AGBA (Asia) Capital Group Limited
AGBA is primarily focusing on investing in China related VC & PE projects and leading companies in consumer products, franchise services, internet & wireless application, new media, education, healthcare, new energy and advanced manufacturing sectors. We invest in all stages of the company lifecycle from early stage to pre-IPO. Our offices are located in Beijing and Hong Kong.
Yong Heng International Asset Management Co Ltd
Yong Heng International Asset Management Co Ltd is an investment arm based in Hong Kong with our headquarter in Guangzhou. We are interested in in the following field: education, IT, non-bank finance and mobile value-added-services. Our group has already invested in a few projects in PRC and several projects are under evaluation. In terms of geographical interest, we like to cover the greater China including PRC, Taiwan, Hong Kong and Macau. For startup companies, we usually invest in the range of US$500,000 to 2 million per project. For established companies, we target to invest in the range of US$10m~30m per project. With our good background and connections in PRC, apart from our funding support, we could help companies to extend their business into mainland market..
500 Startups LLC
500 Startups is a global accelerator and seed fund investing in early stage internet and mobile internet startups. Since our founding in July 2010, we have invested in over 1,000 startups in more than 50 countries. We have 50 employees stationed on almost every continent and have over $150MM in assets under management.
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Overseas Full Members
CBD Investment Corporation
CBD Investment Corporation is an emerging alternative asset manager with offices in Vancouver, Canada and Hong Kong, China. Our experienced team of investment professionals have proven track records in sourcing, structuring, managing and exiting alternative investments in a variety of industries and jurisdictions. CBD deploys a partnership commitment to its private equity investing, which safeguards a smooth transition for owners and aligns management teams with go-forward value creation. This is fostering a track record where open communication, interest alignment, and dignified corporate growth are hallmarks of CBD's investment approach.
Da Vinci Capital Management
Da Vinci Capital Group Limited is a leading independent asset manager setup in 2007 focusing on mid-market Private Equity investments in Russia and other Eurasian countries. The firm has recently won the Best Russian & Central and Eastern European Private Equity Fund - Rising Stars Award 2014 from Private Equity Exchange Awards. Our team provides a strong mix of fund management experience, sector expertise and entrepreneurial capacity. Our team comes from leading international firms such as Renaissance Capital, Credit Suisse, McKinsey, Rosta, Accenture. Collectively, they bring a solid track record in private equity, general management, investment banking, trading, structuring and management consulting experience.
Mahon China Investment Management Ltd
For twenty years, Mahon China has worked with investors to maximise returns from stalled and stressed private equity assets in Mainland China. Mahon China assists investors – including Limited Partners of funds, development finance institutions and banks – to restructure and exit their Chinese investments. To date, Mahon China has helped clients realise value from 21 foreign investments. The company was founded by David Mahon in 1985, and is a partnership of sixteen based primarily in Beijing, with partners in the UK and Australasia. Mahon China is currently General Partner of its fifth PE fund, and also manages a spectrum of individual direct investments held by institutional investors.
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Associate Member
MJ Hudson
MJ Hudson is a global law firm, with offices in London, Jersey, Hong Kong and Guernsey. It was created and designed to provide highly specialist legal advice to the alternative assets industry, operating in core practice areas of fund formation, M&A, corporate finance, investment, capital markets, tax and financial services.
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Recent Events Report
HKVCA Brownbag Luncheon Talk - Getting private equity deals done in Indonesia
21 April 2015
Another of our popular brownbag luncheon talks was held on April 21, 2015 featured the topic of doing private equity deals in Indonesia. Held at the offices of Ashurst, who also generously sponsored the event, more than 50 HKVCA members were in attendance. We would like to extend our thanks to Ashurst as well as to our expert speakers: Atik Susanto from Oentoeng Suria; and Chin Yeoh, Dean Moroz and Joel Hogarth from Ashurst.
HKVCA Young Professionals Mixer
16 April 2015
Our Young Professional Mixer was held on April 16, 2015 at the Havana Bar in Lan Kwai Fong. This regular networking event, which is aimed specifically at our younger professionals, attracted over 60 participants from the private equity and venture capital industries.
HKVCA Brownbag Luncheon Talk
13 April 2015
A brownbag luncheon talk, titled “New Rules on Indirect Transfers of Assets: How it may impact PE/VC Business”, was delivered by Dr Danny Po, Asia-Pacific and China National M&A Tax Leader, and William Lee, Tax Director, from Deloitte China. Held on April 13, 2015, the talk was both supported by and held at the offices of accounting firm Deloitte. Close to 30 members were in attendance. Among the specific issues that were discussed was the applicable scope of the bulletin and the reporting obligations on transaction parties. The talk closed with an illustrative discussion of specific relevant case studies.
HKVCA Members Breakfast Meeting
10 April 2015
On Apr 10, 2015, our always popular monthly breakfast meeting was held, attracting close to 60 of our dedicated HKVCA members. We are grateful to our members and guests who supported this great networking event, and express a special thanks to our sponsor, FTI Consulting.
Industry News
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China’s Li Ruigang Joins Group Controlling Hong Kong’s TVB
April 22, 2015 (Wed)
(Variety by Patrick Frater) - It has been reported that the Hong Kong government’s Communications Authority Wednesday approved changes to TVB’s shareholding structure. Details were not provided by TVB in its annual report or lists of directors and their functions which were also published Wednesday.
However, it is understood that shares in Young Lion were sold to China Media Capital, the state-backed private equity fund that Li founded in 2009. Neither the scale or value of the stake has emerged.
View full article here
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The woman behind Hong Kong's big push to drive technological innovation
April 21, 2015 (Tue)
(SCMP by Alice Woodhouse) - Hong Kong’s investors and young people need to be more open to opportunities in science to help boost the sector in the city, according to the chairperson of Hong Kong Science and Technology Park (HKSTP).
Fanny Law Fan Chiu-fun, who chairs the statutory body charged with supporting innovation in Hong Kong, said there must be a cultural shift in the city to promote investment in technology start-ups.
One of its recent successes has been a company called Vitargent, whose technology uses fish embryos to test for toxic substances in everything from cosmetics to milk. Vitargent recently landed an investment from California-based venture capital firm WI Harper Group.
View full article here
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Alibaba injects online pharmacy business into HK-listed unit
April 15, 2015 (Wed)
(AVCJ by Winnie Liu) - Alibaba Group plans to inject the operations of its online pharmacy business into Alibaba Health Information Technology (Alibaba Health), a Hong Kong-listed healthcare company that it bought alongside Yungfeng Capital last year, in a deal worth HK$19.4 billion ($2.5 billion).
According to a filing, Alibaba Health will issue a combination of shares and convertible bonds to acquire the online drug selling platform on Alibaba's B2C TMall e-commerce platform, with the shares priced at HK$5.28 apiece.
(Pensions & Investments by Arleen Jacobius) - Asia Alternatives Management has $1.8 billion in new commitments in private equity fund of funds Asia Alternatives Capital Partners IV, and its related private equity fund-of-funds vehicles, said Melissa Ma, co-founder and managing director.
Asia Alternatives Capital Partners IV, along with its sleeve fund focused on investments outside Japan, AACP IV Ex-Japan Investors, closed on a combined $1 billion of committed capital, above their combined target of $750 million. The remainder of the capital raised is in separate accounts. Fund IV and the related fund vehicles’ total capital is 20% more than the firm raised in August 2012 when it closed on $1.5 billion in its third fund, related funds and separate accounts.
View full article here
(International Tax Review by Meredith McBride) - In an effort to place itself at the centre of venture capital and private equity investment in Asia, the Hong Kong government introduced a Bill in its Legislative Council on March 25 to extend an exemption from the territory’s 16.5% profits tax to include offshore private equity funds, which is already extended to other types of offshore funds.
Complicated Capital
Tax advisers say the absence of private equity in the original bill could have been simple oversight, or the exclusion could have been delayed due to the technical nature of PE.
"It’s very complicated to get this legislation right," said John Levack, chairman of the technical committee of the Hong Kong Venture Capital and Private Equity Association.
"In 2006 when the current tax exemption law for offshore funds was enacted, the definition of securities excluded private companies as in those days, private equities were not as hot as has subsequently proven to be the case," said Florence Yip, head of PwC’s private equity tax practice in China & Hong Kong.
The exclusion created problems for managers, who had to be acutely aware of their activities in Hong Kong to avoid creating tax liabilities.
"Some managers...
View full article here
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