| The 16th China Private Equity Summit | |  |  |  |  |  |  | | The Hong Kong Venture Capital and Private Equity Association’s 16th China Private Equity Summit (CPES) was held on 26 May, 2017 at the Hong Kong Convention and Exhibition Centre. The theme of this year's event focused on the liquidity and regulatory uncertainties, as well as outbound transactions opportunities, and featured more than 50 expert speakers and panelists representing general partners, limited partners and advisors. The Forum attracted over 500 delegates, of which more than half were senior level and C-suite executives.
As it has in previous years, the 2017 Summit brought together a diverse and experienced group of private equity and venture capital practitioners who invest across all stages and segments onshore and offshore China, including direct investing, secondaries and co-investments. Among the topics discussed as part of the event’s programme were the key issues emerging in terms of investor sentiment, fund mangers’ preferences, buyouts, RMB funds, China capital markets and cross-border investments. There was also discussion of current trends in the media and entertainment sectors and China's transition to a new economy.
As this is the year in which the HKVCA commemorates the 30th anniversary of its founding, the Summit also provided the Association with a tremendous opportunity to reaffirm its commitment to extending its reach to all sectors of the profession. Among the distinguished guests who participated in CPES 2017 were Professor K C Chan, Secretary for Financial Services and the Treasury, Hong Kong SAR; Charles Li, Chief Executive, HKEX; Lei Cai, Chairman, JD Capital; Eric Mason, Managing Director, The Church Pension Fund; Wendy Zhu, Managing Director, AlpInvest; and Yan Liu, Chairman, Beijing Tianxing Capital Company.
We are proud that the China Private Equity Summit has come to be seen as an indispensable platform for practitioners to meet not only their peers, but also government representatives and professional colleagues from other industry associations across the globe. We would like to thank our extremely knowledgeable audience of attendees, many of whom traveled from around the region and overseas. Our most sincere appreciation extends also to our valuable media partners and supporting organizations, and, finally, to our generous sponsors, whose substantial contributions and support made the event not only possible, but indeed hugely successful.
More photos can be viewed here.
Please click here for Professor KC Chan's speech.
Media coverage can be viewed here.
| | Big Opportunity but Significant Hurdles | |  | | Mintoo Bhandari,
Senior Partner,
Apollo Management | | Mintoo Bhandari on the impact of demonetization in India and opportunities for debt investors
Known in private equity for its leveraged and distressed buyouts and debt investments, it is no surprise that Apollo Global Management (AGM) is seizing opportunities to invest in India’s highly leveraged corporations. As Mintoo Bhandari, Managing Director of AGM India Advisors and Senior Partner of the firm’s India dedicated fund, AION Capital, explained, “India is one of the most over-leveraged environments in the world at the corporate level”.
“While the country has a healthy balance sheet, Indian corporations have significantly over-leveraged balance sheets. We believe that roughly half of India’s corporations have too much debt and a quarter of them have unsustainable levels of debt. We would define unsustainable levels as a debt/EBITDA ratio of over eight times. So that’s a big opportunity for distressed debt investors. The challenge, however, is in extracting that opportunity into actionable transactions. That’s where the hard work is,” he says.
Bhandari was a panelist on the private debt panel at the HKVCA’s Asia Private Equity Forum 2017 where much of the discussion was around the impact of political and regulatory change on Asian debt markets. The topic bore particular relevance to Bhandari in the wake of India’s demonetization and as the head of AGM’s India advisory firm, which he launched in 2008 - two years after he joined the firm.
AGM is a leading global alternative investment firm with an expertise in leveraged buyout transactions and purchases of distressed securities involving corporate restructuring, special situations and industry consolidations. Headquartered in New York, it operates in 16 cities globally, including offices in Hong Kong and Mumbai where Bhandari is based. As of March 2017, AGM managed approximately $197 billion, making it the second largest US-based alternative asset management firm. Among the most notable companies currently owned by Apollo are cruise line operator Norwegian Cruise Lines, home security giant ADT Corporation, Veralia, the leading bottling packaging company in Europe, document outsourcing solutions provider Novitex Enterprise Solutions and cloud space company Rackspace.
The private equity business is the cornerstone of Apollo's three business lines alongside credit and real estate. The latter, Apollo Global Real Estate, was established in 2008 and manages several debt and equity-oriented real estate investment funds. The credit business, which is the world’s largest alternative credit platform, invests through a variety of investment vehicles, including mezzanine funds, hedge funds, European non-performing loan funds and senior credit opportunity funds.
During the Asia Private Equity Forum in January 2017, much of the discussion around investment opportunities in Asia Pacific was focused on India and whether the impact of demonetization will prove to be a monetary and political marvel. In short, in November 2016 Prime Minister Narendra Modi’s government made a high-risk economic intervention to try and revitalize India’s moribund tax base and challenge corruption: overnight, 86 percent of cash in circulation was voided. Less than three percent of Indians filed any income taxes in 2013, and though the majority of Indians’ incomes are probably below the tax threshold, India’s black market is huge – World Bank estimates put it at around a quarter of the total economy.
In a country almost 90 percent cash reliant, overnight demonetization was not without impact, but it was short-lived. People queued hours outside banks and ATMs and incomes were lost as customers and employers had no cash to pay workers. Six months later, however, the country has emerged with relatively few frictions. The economy grew by seven percent in Q4 2016 and many indicators, such as economic sentiment and vehicle sales, show a rebound. Accordingly, Bhandari is optimistic, that the short-term pain has passed and this has proven to be an incredibly bold and constructive measure.
“Removing 86 percent of the currency from the system and forcing an electronically oriented, traceable, trackable monetary system was certainly a bold move and one that few countries would ever consider doing,” he says.
“What we have now is a tax base that should increase, with the inclusion of a segment of the economy that was outside of the tax environment. By adding to the tax base, all those people that have been outside the system, which will cover real estate and other cash-influenced transactions, will long term add a lot of positives to the economy. But we believe there’s going to be some pain. Short term it’s a difficult and challenging move to execute well. But at the end of the day, India is very likely to be much better off for it.”
On the topic of distressed debt, Bhandari is very clear that the time is coming for the country to address this mounting problem. There are, however, a number of issues that relate to being able to action the growing scale and number of opportunities. While there have been many announcements of firms seeking to attack this arena, very few, according to Bhandari have the “skills, dexterity, and patience” to overcome the array of challenges to turn the opportunity into actionable investments with an appropriate risk/reward profile. Bhandari believes that “while the opportunity is large, there are only a few investment teams that will have the tenacity and capacity to execute successfully.”
| | | | Full |  | HKVCA Masterclass: The Use of Segregated Portfolio Companies
in the Establishment of Private Equity Funds | | Sponsored by |  | | Speakers: | Anne-Marie Godfrey, | | Partner, Akin Gump Struss Hauer & Feld | | Chris Knight, | | Counsel, Akin Gump Struss Hauer & Feld | | View speakers bio here. | | Date: | 8 June, 2017 (Thu) | | Time: | 14:15 - 17:00 | | Venue: | Akin Gump Office, 18/F Gloucester Tower, The Landmark | | 15 Queen's Road Central, Central, Hong Kong | | CPT: | 2 points | |
|  | | CHKLC and HKVCA Happy Hour Drinks | | Organised by |  |  | | | Sponsored by |  | | Date: | 15 June, 2017 (Thu) | | Time: | 18:30 - 20:00 | | Venue: | Verandah, The Foreign Correspondents’ Club, Hong Kong, | | North Block, 2 Lower Albert Road, Central, Hong Kong | | Fee: | HKVCA & CHKLC members: HK$100/person | | Others: HK$250/person | | | | | | 
|  | | HKVCA Luncheon Seminar - India Regulatory Update | | Sponsored by |  | | Speakers: | Siddharth Shah, Partner | Corporate, Funds, | | M&A and Private Equity, Mumbai, Khaitan & Co | | Kartick Maheshwari, Partner | Corporate and Private Equity, Mumbai, Khaitan & Co | | View speakers bio here. | | Date: | 21 June, 2017 (Wed) | | Time: | 12:30 - 14:00 | | Venue: | The China Club, 13/F, The Old Bank of China Building, | | Bank Street, Central, HK | | Fee*: | Corporate Full Members: | | one FREE pass per company | | | | Associate Members/ Full Members (Additional pass): | | HK$450 per person | | | | Non-member: HK$800 per person | | | | *Note, free pass no show will be charged full price | | | | CPT: | 1 point | | | |  |
|  | | | | | | Speakers: | Alvin Lam, Senior Managing Director, CVC Capital Partners | | Brian Ho, China Sustainability Leader, Climate Change and Sustainability Services, Ernst & Young | | Hauman Yeung, Director, Ascent Partners Advisory Service | | Jamie Allen, Secretary General, Asia Corporate Governance Association | | Jeanne Ng, Director, Group Sustainability, CLP Power Hong Kong | | Katherine Ng, Head of Policy, Listing Department, Hong Kong Exchanges & Clearing | | View speakers bio here. | | Date: | 27 June, 2017 (Tue) | | Time: | 12:15 - 14:00 | | Venue: | The Exchange Auditorium, The Exchange Exhibition Hall, | | 1/F.,One and Two Exchange Square, Central, Hong Kong | | Fee*: | Corporate Full Members / Associate Members: | | one FREE pass per company | | Additional pass: HK$200 per person | | | | Non-member: HK$400 per person | | | | *Note, free pass no show will be charged full price | | *Fee inclusive of a light lunch | | CPT: | 1.5 points | | | | |
| | Members Only Event |  | | HKVCA Members Breakfast Meeting | | Sponsored by | | | Date: | 7 July, 2017 (Fri) | | Time: | 8:00 - 9:00 | | Venue: | Victoria Suite, Hong Kong Club, 1 Jackson Road, Central, HK | | (Room reserved under the name of Mr. Johnny Chan) | | Fee*: | Full Member (Corporate): one free pass per company | | Associate Member/ Full Member (additional pass): HK$300 | | *Note, free pass no show will be charged full price | | *An additional charge may apply to accommodate special dietary requests. | | *Please be reminded that there will be no breakfast meeting in August, September and October 2017. | |
|  | | Platinum Sponsor | Venture Forum Sponsor |  |  |   | | | | | Date: | 10 July, 2017 (Mon) | | Time: | 14:00 - 18:45 (Followed by a cocktail reception) | | Venue: | KPMG Office, 23/F Hysan Place, Causeway Bay, Hong Kong | | | | Fee: | Early bird Rate (Payment deadline: 16 June 2017) | | | | Corporate Full Members (VC/PE firms) | | One FREE pass per company
HK$580 HK$800 per additional person
Corporate Associate/Overseas Members
HK$580 HK$800 per person
| | Non-member Rate
HK$1,500 HK$1,800 per person | | | | CPT: | 4.5 points | | | |
|  | | Date | Time | Session | CPT | | 5 September | 09:30 – 13:00 | Module 1: PE Basics | 3 | | 5 September | 14:00 – 17:30 | Early Stage Investment | 3 | | 12 September | 10:00 – 12:30 | Module 2: The Investment Decision – Due Diligence Pricing and Structure | 2 | | 19 September | 14:00 – 17:20 | Module 3: Valuation Issues / ESG / “High Level” Tax issues | 3 | | 21 September | 13:00 – 16:00 | Module 4:
Transaction Documentation | 2.5 | | 27 September | 14:00 – 17:15 | Module 5: Post Investment | 3 | | 11 October | 11:00 – 14:30 | Module 6: Tax/ Fundraising | 3 | | 25 October | 14:00 – 17:15 | Case Studies: Pacific Coffee &
CVC/HKBN | 3 | | | View all speakers here. | | Register in a group of two (2) or more from the same company and enjoy a 10% discount.
| HKVCA Member | Non-Member | | Per Module | HK$1,300 | HK$2,600 | | Case Studies | HK$1,300 | HK$2,600 | | All 7 Sessions | HK$8,300 | HK$16,600 | | | | | | New Members Welcome | | Corporate Full Members | | | The Abraaj Group
The Abraaj Group is a leading investor focused on select markets across Africa, Asia, Latin America, the Middle East and Turkey. Founded in 2002 by Founder and Chief Executive Arif Naqvi, the Group has pioneered the private equity industry in many of the markets where it operates with a legacy of investing in many of these growth markets for over two decades. The Firm has developed an approach tailored to converting investment opportunities in growth economies into compelling net US$ returns that exceed relevant public and private benchmarks. The Group currently has c. US$ 10 billion in assets under management and focuses on investment strategies encompassing private equity, impact investing, credit strategies and real estate. | | | ACE & Company Hong Kong Limited
ACE & Company SA is authorized and regulated as an asset manager by FINMA, Switzerland’s independent financial-markets regulator. FINMA’s mandate includes supervision of financial institutions, including banks, collective investment schemes, and their asset managers and fund management companies. ACE & Company Hong Kong Limited is a service company of ACE & Company SA. | | | Affinity Equity Partners Limited
Affinity Equity Partners is an independently owned private equity fund manager established in March 2004 following the spin-off of the UBS Capital Asia Pacific team, the successful private equity arm of UBS AG in the region. Affinity raised its third external fund of US$3.8 billion in early 2014. Affinity currently advises and manages approximately US$8 billion of funds and assets, making it one of the largest independent financial sponsors in the region. Affinity operates out of six offices: Hong Kong, Singapore, Seoul, Sydney, Beijing and Jakarta. | | | AGIC Capital
AGIC Capital (AGIC) is a European-Asian private equity fund focusing on investment in fast growing companies in Europe and the US. It invests in companies concentrating on industrial productivity and production efficiency, enabling new applications and manufacturing methods that drive innovation for industrial products and solutions. | | | HNA Group (International) Company Limited
HNA Group (International) Company Limited (the Company) is an investment arm of the HNA Group. With the HNA Group’s international growth accelerating since 2010, it set up the Company as a global headquarters for the Group's overseas investment arm, supporting pre-merger due diligence and post-merger integration (PMI). Its asset management department is also being set up to develop an investment platform for potential investors to invest in HNA Group's overseas assets and M&A projects. | | | Ion Pacific Limited
Headquartered in Hong Kong and with an office in London, we serve a prominent and diverse set of clients, partners and investors who are seeking a truly innovative and internationally sophisticated approach to an increasingly complex global business environment. | | | Sun Hung Kai Strategic Capital Limited
Sun Hung Kai Strategic Capital Limited is the investment arm of Sun Hung Kai & Co Limited, which is listed on the Hong Kong Stock Exchange under the ticker 86.HK. Our portfolio invests across public and private investments, in credit and equity opportunities as well as real estate, with the aim of achieving attractive, risk-adjusted investment returns over the medium to long term. | | | | Overseas Full Member | | | Global From Day One Fund 2
Global From Day One Fund II invests in high-growth technology sectors (enterprise software and the internet) in New Zealand and Southeast Asia at the Series A stage. GD1 provides the expertise and capital for growth and scalability. | | | | Corporate Associate Members | | | Campbells Legal (Hong Kong) Ltd
Campbells is a leading full service offshore law firm established over 45 years ago. From our offices in the Cayman Islands, the British Virgin Islands and Hong Kong we provide comprehensive corporate and litigation advice and services to clients worldwide in relation to Cayman Islands and British Virgin Islands law. We are regularly trusted to advise some of the most prominent names in finance, investment and insurance and we are frequently involved in the largest and most complex transactions, disputes and insolvencies in both jurisdictions. Our legal team is internationally recognized for its expertise by leading directories and trade publications and we are also proud to be actively involved in the development of legislation, sitting on critical government legislative committees. | | | Loeb & Loeb LLP
Loeb & Loeb LLP is a multi-service law firm with approximately 350 attorneys and offices in Los Angeles, New York, Chicago, Nashville, Washington, DC, Beijing and Hong Kong. We focus on select core industries and practice areas rather than endeavoring to be all things to all clients. The firm represents multinational, Fortune 100 companies in their mid-market transactions and litigation matters, and serves as primary outside counsel to a multitude of mid-market clients. We also represent clients ranging from emerging companies to high-net-worth individuals and families. | | | Walkers
Walkers is a leading international law firm. We advise on the laws of Bermuda*, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey (Channel Islands). We provide legal, corporate and fiduciary services to global corporations, financial institutions, capital markets participants and investment fund managers. In Asia, our offices in Hong Kong and Singapore have specialist finance, investment funds and corporate, and insolvency, restructuring and litigation practice groups with dedicated professionals that have a broad range of experience gained from some of the world’s leading onshore law firms and financial institutions. | | | | Overseas Associate Member | | | Fully Sharp Ltd
Fully Sharp Ltd is a Hong‐Kong based company providing consulting advisory mainly to European companies and entrepreneurs seeking to raise funds and Asian PE funds seeking investment opportunities abroad. Benjamin Morin-Muller, a former consultant, banker, diplomat and entrepreneur who has worked in Europe and Asia, is Managing Director. |
| | Recent Events Report | Members Breakfast Meeting
2 June, 2017 |  | | The HKVCA's monthly breakfast meeting was held at the Hong Kong Club on Friday, 2 June, 2017. The event was attracted around 70 members taking full advantage of the opportunity to network and reconnect with their fellow industry practitioners. This month's breakfast would not have been possible without the sponsorship of Ernst & Young (EY) to whom we would like to extend our sincere thanks for their continued support and help in making this terrific networking event possible for our members. | | | Brownbag Luncheon Talk
20 April, 2017 |  | The HKVCA hosted its latest brownbag luncheon talk on 20 April 2017 at Deloitte’s offices. Professor Kenneth Lee, Chief of the School of Biomedical Science at The Chinese University of Hong Kong; Judith Li, Partner at Lilly Asia Ventures; and Bosun Hau, Sailing Capital’s Managing Director and Partner, discussed the latest trends in biotechnology, in particular the various applications for stem cell technology and the outlook for 3D bioprinting. Bosun and Judith also shared their thoughts on current investment sentiment in the healthcare space as well as the strength of the biotechnology and pharmaceutical sectors across geographies.
The HKVCA and the Education Committee is very pleased that as many as 70 members attended the luncheon talk and were also able to take the opportunity to meet and network with their colleagues. We would like to thank all the participants, and especially our venue sponsor, Deloitte, whose support made this event possible. |
| | | Industry News | | KKR closes third Asian fund at $9.3b | | —2 June, 2017 | | (AVCJ by Tim Burroughs) - KKR has closed its third pan-regional fund at $9.3 billion, breaking its own record for the largest pool of private equity capital ever raised for deployment in Asia. The fundraising process took less than seven months and the vehicle is said to have been substantially oversubscribed. | | (link to the full article) |
| | Qupital, Hong Kong's first online invoice discounting exchange, secures USD 2 million seed round of funding | | —17 May, 2017 | | (Press Release) - Qupital, Hong Kong's first and largest online invoice discounting exchange, has secured a seed investment round of USD 2 million. | | (link to the full article) |
| | ShawKwei Said to Target $800 Million for Fourth Fund in Asia | | —16 May, 2017 | | (Bloomberg by Cathy Chan) - ShawKwei & Partners, a Hong Kong-based private-equity firm, has secured more than $400 million in the first round of fundraising for its fourth fund in Asia, a person with knowledge of the matter said. | | (link to the full article) |
| | Diligencing China Inc: Getting Behind the Curtain in China's [Continuing] West-Bound Buying Spree | | —4 Apirl, 2017 | | (Mintz Group by Jingyi Li Blank) - In mid-2016, a little-known consortium of Chinese investors, the Sino-Europe Sports Investment Management Changxing Co., made an $825 million bid for the storied Italian soccer club, AC Milan, then owned by former Italian Prime Minister Silvio Berlusconi. | | (link to the full article) | | |
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