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Asia Private Equity Forum 2016 |
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The 6th Asia Private Equity Forum (APEF), organized by the Hong Kong Venture Capital and Private Equity Association (HKVCA), was held on 20th January, 2016 at the Hong Kong Convention and Exhibition Centre. This year's event featured in depth discussions of the many challenges and opportunities for value creation within the industry, with 78 speakers and panelists representing general partners, limited partners and advisors. The Forum attracted over 600 delegates, of which more than half were senior level and C-suite executives.
The Forum brought together an experienced group of private equity and venture capital practitioners with the aim of identifying the latest opportunities, trends and challenges facing private capital markets, across all stages and geographies in Asia, with a focus that included private equity real estate, private debt and a robust attention to environmental, social and governance standards.
Distinguished guests at this annual flagship event included Financial Secretary of the Hong Kong SAR, John Tsang Chun-wah, GBM, JP; Dr. Fred Hu, Chairman and CEO of Primavera Capital Group; Daniel Mintz, Founding Managing Director of Olympus Capital Asia; and Charles Ong, Co-Chairman and Co-CEO of RRJ Group.
We would like to thank our extremely knowledgeable audience of attendees who came from across the Asia region, making this year’s Forum a most profitable and valuable networking opportunity for participants. Thank you also to our media partners and supporting organizations. Finally, the HKVCA would like to express our sincere thanks to our sponsors, whose substantial contributions and support made the event not only possible, but indeed hugely successful.
Please click here for Mr John Tsang's speech.
More coverage can be viewed here.
More photos can be viewed here.
Video highlights can be view here.
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The HKVCA held its Gala Dinner 2016 on the evening of Tuesday, 19 January. The popular annual event was sold-out with more than 200 attendees gathered at the prestigious Hong Kong Country Club to enjoy an evening of great food and excellent entertainment. Each table included creative and colorful table decorations featuring monkey figures representing the festivities associated with the upcoming Chinese New Year. The evening’s entertainment was the major highlight of the night, with a unique yet enthralling performance delivered by a trio of students from Kings College Hong Kong playing the harmonica. The HKVCA was pleased to have been able to donate HK$15,000 to support and promote the beauty and artistry of this instrument and the musicians dedicated to its development. The evening also featured a presentation outlining the HKVCA’s 2015 activities and noteworthy achievements over the course of the year.
We would like to extend our special thanks to our cocktail sponsor, Rocky Lee of Cadwalader, Wickersham & Taft LLP, for supporting this hugely successful event and to all the participants who helped to make our annual dinner a most unforgettable night.
More photos can be viewed here.
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Legal Consolidation, Operational Efficiency – and Jobs
The HKVCA asks Vice Chairman John Levack what’s in store for Hong Kong’s financial services industry in 2016
2016 promises to be a landmark year for Hong Kong with several legislative and regulatory changes that are set to cement its status as Asia’s leading business centre and the world’s third-ranked global financial centre after New York and London.
Among the key pieces of legislation to take effect is the Inland Revenue (Amendment) Bill 2015, which extends the profits tax exemption for offshore funds to private equity (PE) funds, and affects not only these but also special purpose vehicles (SPVs) established to hold offshore investments, and Securities and Futures Commission-licensed persons.
For offshore PE funds, the tax exemption allows the upgrading of advisory operations serving them from Hong Kong into management entities. This simplifies operating processes and allows efficiency gains in the way that they are managed. While several firms have started the process of upgrading their Hong Kong operations, many will wait until the next fund before altering their internal processes, according to John Levack, Managing Director of Electra Partners Asia and a Vice Chairman of the Hong Kong Venture Capital and Private Equity Association (HKVCA).
“The government has put some protections into the legislation to avoid abuse and these do present some complications. The implementation of the new law will be governed by the Inland Revenue Department’s (IRD) practice notes – and we are waiting to see how user friendly these are,” he noted.
SPVs are widely used as holding vehicles in Hong Kong under an offshore fund. In discussions with the IRD, it is aware of the need to be able to perform substantive operations with respect to the underlying investments in these vehicles without this causing a risk of the offshore fund being taxed in Hong Kong. Again, the industry is waiting for the IRD practice notes to see how the law will be interpreted. “We are expecting to see guidance that will allow activities in the SPVs without compromising the SPV owner’s (the Fund) status as an offshore entity for tax purposes. This concept will be important for discussions on treaty benefits in double tax agreements. As always, it will be the practical interpretations that determine the efficacy of the new law”, Levack added.
With respect to the licensing requirements for PE firms and the offshore funds tax exemption, Levack said he hoped they would be reasonably de-linked. The government has placed restrictions on the type of entity that could benefit from the tax exemption and these restrictions may exclude some non-licensed firms. “These firms have the choice to continue to operate as advisors in Hong Kong or some may seek to be licensed so that they can offer full manager services. Whilst it will be frustrating for the firms in question, this problem does not affect a large number of firms”, he said.
The Inland Revenue (Amendment) Bill 2015 represents a first step in a process of improvement of Hong Kong’s structural attractiveness for PE. The second, and more important, step is to create the right framework for the funds to come onshore in Hong Kong. The goal is to have an integrated operation of fund and its manager based in Hong Kong.
“This concept is important as PE firms use tax treaties to protect gains in destination countries from being taxed as domestic gains. There are hundreds of these bilateral treaties, but very few applying to the ‘tax havens’ where PE funds have traditionally been located”, Levack explained. “Hong Kong has a good (but could-be-better) network of avoidance of double tax treaties. The consolidation of fund and manager together in Hong Kong will provide the substance that is required to show that the treaty is not being used purely for tax planning”, he added.
The fund management industry (including mutual and hedge funds) has been discussing this with the Hong Kong Government and there is an acceptance that bringing the fund entities - which have predominantly been created and domiciled outside of Hong Kong - onshore in Hong Kong may not generate any incremental direct tax income but will create many long term sustainable jobs.
Significantly, the only place in Asia where there is now more private equity capital than Hong Kong is Mainland China. Given that this PE activity is spread out over many cities, Hong Kong is the leading single hub for PE in Asia. This has created a deep pool of expertise, both in the number and experience of PE professionals and also in the network of advisory and administration outsourcing firms that PE firms rely on to be able to execute their investment strategies.
These human capital advantages are driving a thriving and expanding investment community targeting growing companies in China and the rest of Asia, Levack noted. “We are seeing evidence of a growing trend of China outbound investment using Hong Kong as a near-shore centre in which to establish the team that will be allocating China-sourced capital into Asia and beyond. This trend is likely to grow, particularly if we can offer the right legal and tax structures to complement the human skills that exist here”, he noted.
To make Hong Kong’s PE industry even more competitive, however, Levack is hoping that the Offshore Funds Tax Exemption extension to PE will be the first of a series of upgrades for the industry in Hong Kong. The next requested upgrade is to encourage funds to be created onshore in Hong Kong. The key elements of the changes requested are (i) that the Hong Kong limited partnership law be amended so that it absorbs the best practice features from other jurisdictions and (ii) clarity that these new onshore partnership vehicles with (predominantly) offshore investors would be, in themselves, tax neutral.
“This will consolidate the legal residence of the fund and its management in one place, further improving operational efficiency and, at the same time, creating very strong ‘substance’ in Hong Kong to be applied to tax treaties”, Levack said. “Such a consolidation would result in the creation of new fund administration jobs here; jobs that are currently being pushed to offshore jurisdictions.”
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HKVCA Welcomes the Establishment of a Hong Kong Innovation and Technology Venture Fund, click here for full Press Release. |
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HKVCA Members Event
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HKVCA ESG Brownbag Luncheon Talk
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Sponsored by |
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Speakers: |
Jie Gong, Partner, Pantheon Ventures (HK) LLP |
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Hannah Routh, Director of Sustainability and |
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Climate Change Consulting, PwC |
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Date: |
22 February, 2016 (Mon) |
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Time: |
12:30-14:00 |
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Venue: |
PwC Executive Conference Centre, 21/F, Edinburgh Tower, |
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The Landmark, 15 Queen's Road Central, Hong Kong |
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Fee: |
Full Member (Corporate): one free pass per company |
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Associate Member/ Full Member (additional pass): |
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HK$200 per person |
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CPT: |
1.5 points |
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By invitation only. Please contact Colin Tam at ctam@hkvca.com.hk for any inquiries. |
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Platinum Sponsors |
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Gold Sponsors |
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Breakfast Sponsor |
Wine Sponsor |
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Date: |
4 March, 2016 (Fri) |
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Agenda: |
Check-in and breakfast: 7:15 |
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Shortgun Start: 8:15 |
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Venue: |
The Hong Kong Golf Club (Fanling) |
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Format: |
Modified Scramble |
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Fee: |
HKVCA Member: HK$2,900 |
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Non-member: HK$3,800 |
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Golf cart, light breakfast & lunch included. |
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HKVCA Members Event |
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Sponsored by |
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Date: |
11 March 2016, (Fri) |
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Time: |
8:00-9:00 |
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Venue: |
Victoria Suite, Hong Kong Club, 1 Jackson Road, Central, HK |
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(Room reserved under the name of Johnny Chan) |
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Fee: |
Full Member (Corporate): one free pass per company |
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*Note, free pass no shows will be charged full price |
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Associate member/ Full Member (additional pass): HK$280 |
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*An additional charge may apply to accommodate special dietary requests. |
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Platinum Sponsor |
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Venture Forum Sponsor |
Silver Sponsor |
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Date: |
March 18, 2016 (Fri) |
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Time: |
14:30 - 18:00 followed by cocktail reception |
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Venue: |
KPMG Offices, 23/F Hysan Place, |
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Causeway Bay, Hong Kong |
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Fee: |
Early bird rate (Payment deadline: February 29, 2016) |
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HKVCA Member: HK$580 HK$ 800 |
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Non-member: HK$1,500 HK$1,800 |
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CPT: |
3 points |
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Speakers: |
Patrick Yip, Tax Partner, Deloitte China |
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Candy Chan, Tax Principal, Tax & |
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Business Advisory Services, Deloitte China |
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Date: |
21 March, 2016 (Mon) |
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Time: |
12:30-14:00 |
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Venue: |
Deloitte Touche Tohmatsu, 35/F One Pacific Place |
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88 Queensway, Hong Kong |
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Fee: |
Full Member (Corporate): one free pass per company |
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Associate Member/ Full Member (additional pass): |
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HK$200 per person |
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Non Member: HK$400 |
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CPT: |
1.5 points |
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HKVCA Supporting Events:
HKSTP Smart City Campaign
Dec 2015 - Feb 2017
International Private Equity Market
17-19 February 2016
AVCJ China Forum 2016
9-10 March 2016
SuperReturn China 2016
18-20 April 2016
Belt and Road Summit 2016
18 May 2016
AVPN Conference 2016
23-25 May 2016
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New Members Welcome
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Corporate Full Members
Angelo, Gordon Asia Limited
Angelo, Gordon & Co. is a privately held firm dedicated to alternative investing. The firm was founded in 1988 and currently manages approximately USD 27 billion. Angelo, Gordon’s investment focus centers on three core disciplines - Credit, Real Estate, Private Equity. Angelo, Gordon has over 370 employees and is headquartered in New York, with offices in the U.S. and associated offices in Europe and Asia.
Peterson Capital
Prostar Capital
Prostar Capital is a private equity firm established to invest across the mid-market energy value chain in the Asia-Pacific region. Prostar manages more than US$600 million in capital commitments. The firm invests in operating companies, projects and assets that are focused on midstream, storage and downstream energy infrastructure.
Radiant Venture Capital Limited
Radiant Venture Capital ("RVC") partners with the entrepreneurs who seek to create, improve or utilize best-in-class technologies in building successful businesses that touch the lives of people. RVC focuses on investing in and supporting top-tier start-up and early-stage technology or technology enabled companies for which technology is a key driver of their competitive advantages. Leveraging the experiences and networks of its partners and advisors, RVC provides its portfolio companies the resources they need to expand their businesses. It focuses primarily in Israel and Greater China but will also invest in companies from the rest of the world.
TradeInvest HK Limited
Primest Capital
Primest Capital founded 1990 in Stockholm Sweden by 3 major industrialist families seeking to expand their respective interests across Eastern Europe, CIS and Greater China. Today the investment team is focused on takeovers of undervalued companies and providing strategic project financing. Primest prefers a controlling equity stake in companies to assist the board and management in achieving their targets and goals. Primest will consider technology, real estate and mining sectors for strategic and financial investment.
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Overseas Full Members
Click Ventures
Creador
Creador is a private equity firm which partners with passionate entrepreneurs to grow world-class businesses in South and Southeast Asia. Our senior management team, led by Brahmal Vasudevan, Cyril Noerhadi and Anand Narayan has many years of investment experience and worked with many successful companies in the region.
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Corporate Associate Members
Control Risks Pacific Limtied
Control Risks is an independent, global risk consultancy specialising in political, integrity and security risk. We help some of the most influential organisations in the world to understand and manage the risks and opportunities of operating in complex or hostile environments. Working across five continents and with 36 offices worldwide, Control Risks provides a broad range of services to help our clients manage political, integrity and security risk.
First Avenue
First Avenue is a leading placement agent and advisory firm dedicated to raising capital for alternative asset managers and corporations across private equity, private credit, real assets and real estate in the developed and emerging markets. An experienced team across the globe provides access to an extensive network of institutional investors.
Fortuna Group Holding (HK) Co., Limited
Fortuna Group Holding (Hong Kong) Limited has been providing a full range of wealth management services to high-end customers since 2000.As a financial institution engaged in private securities investments, equity investments, venture capital and other business, we also hold the “Private Equity Fund Manager Registration Certificate” in Mainland China, and issued the first fund of funds (FOF) in the domestic industry.
Ogier
Ogier provides legal advice on BVI, Cayman, Guernsey, Jersey and Luxembourg law. Our network of locations also includes Hong Kong, Shanghai and Tokyo. Legal services for the corporate and financial sectors form the core of our business, principally in the areas of banking and finance, corporate and commercial, investment funds, dispute resolution, private equity and private wealth.
Sanne Group Asia Limited
Comprehensively regulated and multi-jurisdictional, Sanne principle role is to manage, administrate and operate fund, corporate and trust structures for customers, utilising our network of international offices and divisional structure. Established for 25 years and listed on the main market of the London Stock Exchange, Sanne engages 300 staff worldwide and has in excess of GBP 100bn under administration.
Thomson Reuters
Thomson Reuters Risk Management Solutions bring together trusted regulatory, customer and pricing data, intuitive software and expert insight and services – an unrivaled combination in the industry that empowers professionals and enterprises to confidently anticipate and act on risks – and make smarter decisions that accelerate business performance.
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Recent Events Report
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HKVCA Members Breakfast Meeting
8 January 2016
Our first monthly breakfast meeting of the year was held at the Hong Kong Club on Friday, 8 January. The event was oversubscribed, with more than 60 HKVCA members networking and reconnecting with their fellow industry practitioners after the end of year festivities.
This month's breakfast would not have been possible without the sponsorship of FTI Consulting to whom we would like to extend our sincere thanks for its continued support and help in making this terrific networking event possible for our members. We of course also wish each and every one a very happy New Year.
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Industry News
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HKVCA Welcomes the Establishment of a Hong Kong Innovation and Technology Venture Fund
14 January 2016
Hong Kong, 14 January 2016 – The Hong Kong Venture Capital and Private Equity Association (HKVCA) welcomes the announcement by the Chief Executive of the creation of a HK$2 billion innovation and technology venture fund at his 2016 Policy Address. The new fund aims to encourage increased funding from institutional venture capital funds to Hong Kong technology start-ups through a matching process, thereby promoting an increase in venture capital activity in Hong Kong and supporting local innovation.
View full article here
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AMG buys minority stake in Baring Private Equity Asia
5 January 2016
(Pensions & Investments by James Comtois) - Affiliated Managers Group has bought a minority ownership stake in Hong Kong-based private equity firm Baring Private Equity Asia, said spokeswoman Alexandra Lynn. Terms of the transaction were not disclosed.
Baring Private Equity Asia closes sixth fund at $4 billion, 60% higher than Fund V.
Baring Asia's senior partners will continue to hold a majority of the equity of the business and direct the day-to-day operations of the company.
View full article here
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Hong-Kong based private equity firm PAG Asia Capital raises $3.66b for second buyout fund
5 January 2016
(DealStreetAsia) - Hong-Kong based private equity firm PAG Asia Capital, run by former TPG executive Shan Weijian, said Tuesday that it had raised $3.66 billion for its second Asian buyout fund.
The company, which employs over 300 executives, across Hong Kong, Shanghai, Beijing, Shenzhen, Tokyo, Singapore, Sydney, Seoul and Delhi, also disclosed the close of its second fund in a securities filing, and added that PAG Asia II LP fund would invest in major markets in the region.
View full article here
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