HK the ideal hub for big equity deals
Asia's high growth, and Hong Kong's strategic position within the region, make the city the ideal Asian hub for regional and international private equity (PE) activities.
According to the Hong Kong Venture Capital and Private Equity Association (HKVCA), with about US$60 billion, the city is home to the largest available pool of capital for private equity investment in the Asia-Pacific region.
The figure has grown from virtually nothing in 1997, following the Asian financial crisis which sparked the growth in private equity investments.
However, as HKVCA co-president Chia Kok-onn points out, only a small part of this money is actually invested in Hong Kong, which acts as a regional entrepot rather than a destination for investment.
'Hong Kong has nearly all the necessary ingredients to attract and administer PE funding,' Chia says.
Highlighting Hong Kong's strengths, he says conducive laws and tax regulations, technical, banking and financial expertise, and a pool of PE professionals and entrepreneurs are vital requirements to execute and maintain deal flows.
Chia says that as the central government in Beijing continues to recognise and support the positive affects that PE has on innovation and economic growth, Hong Kong becomes more likely to be considered a strategic hub. 'We need to realise the advantages we have and build on them,' says Chia, who believes Hong Kong could become the Asian financial equivalent of Silicon Valley.
Chia points out that enterprises across Asia are putting more emphasis on innovation, research and development. New ventures are also rising and bringing new products and services to the market.
Chia says mainland companies that have benefited from PE investment include Tencent, Haier, Citic Group, and car and battery maker BYD.
