HK Investment Corp, Guangdong eye joint fund for GBA projects
The new $7.9-billion Hong Kong Investment Corporation (HKIC) is considering setting up a joint investment fund with the Guangdong government to co-invest in Greater Bay Area (GBA) projects, the Hong Kong government announced on October 25.
Meanwhile, the government has set a $3.8-million investment threshold for investors to gain Hong Kong residency, in a bid to attract talent and capital to the GBA.
In his second Policy Address, Hong Kong Chief Executive John Lee Ka-chiu said the government-owned HKIC will set up a joint fund under its HK$5-billion ($640 million) GBA Investment Fund in order to invest in projects in the 11-city cluster with “social and economic benefits”, together with the Guangdong provincial government and other institutions.
The Hong Kong leader didn’t disclose more details about the joint fund.
“As the relationship between Hong Kong and other cities in the GBA becomes closer, investing in the development of various priority industries in the region will not only inject more dynamism into the development of the region, but also bring economic and social benefits to Hong Kong,” an HKIC spokesperson told AsianInvestor.
“The HKIC will continue to take forward the relevant work and make announcements at the appropriate juncture. Since the relevant details involve market-sensitive information, they can not be disclosed at this stage,” the spokesperson said.
HKIC welcomed its first chief executive officer, former Hong Kong Monetary Authority’s Clara Chan, on October 9. According to its website, Chan will oversee three teams: investments, risk management and compliance, and corporate affairs.
It is expected that the new government wealth fund will make new investments by the end of this year at the earliest. It will target private market investments that can drive Hong Kong’s development in fintech, artificial intelligence, biotech, life sciences, advanced manufacturing, and possibly green finance.
AsianInvestor reported on October 9 that HKIC had engaged with the Shenzhen government to take reference from its Shenzhen Angel Fund of Funds structure and operations, and to explore co-investment opportunities.
The initial assets allocated to HKIC are HK$62 billion ($7.9 billion). Besides the GBA Investment Fund, it also manages the HK$22-billion Hong Kong Growth Portfolio, the HK$5-billion Strategic Tech Fund, and the HK$30-billion Co-Investment Fund.
RAISING THE BAR
Another notable measure in the Policy Address is the increased threshold of the investment residency scheme, which the market believes will help attract capital for GBA development.
The framework, called the capital investment entrant scheme, allows investors who make investments of HK$30 million or above in assets such as stocks, funds and bonds — excluding real estate — to apply for residency in Hong Kong.
The bar is triple the previous version, which was suspended in 2015 due to the overheated property market.
“This will strengthen the development of our asset and wealth management business, financial services, and related professional services,” Lee said, noting that details of the scheme will be announced by the end of this year.
Welcoming the scheme, Christine Wong, head of wealth planning at Bank of Singapore Hong Kong Branch, said: “The investment requirement does not require real estate investment and has a higher focus on bankable assets.
“This would provide an opportunity to attract more high-net-worth families in other locations to have their wealth managed in Hong Kong, and to attract capital investors to set up family offices in Hong Kong to access investment opportunities in the Greater Bay Area.”
While the threshold of the new scheme is triple the old one, she thinks it would still be considered an attractive option for attracting talent and many HNW investors.
“This is because it provides a straightforward and efficient program to obtain residency in Hong Kong through investments,” Wong told AsianInvestor.
Noting that the scope of funds eligible for the scheme is not yet announced, Sally Wong, CEO of the Hong Kong Investment Funds Association, hopes the government can allow all Securities and Futures Commission-authorised funds to be eligible.
“We believe that a broader investment universe would make the scheme more attractive to applicants,” Sally Wong told AsianInvestor.