HK's new wealth fund to start investing, plans SWF summit
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The new Hong Kong Investment Corporation (HKIC) is posed to boost the city’s technology sector development by making new investments and hosting summits targeting international sovereign wealth funds in the year ahead.
The fund is set to implement its first batch of direct investment and co‑investment projects in the first half of 2024, Hong Kong’s Financial Secretary Paul Chan Mo-po announced while unveiling the city’s annual budget on February 28.
HK Financial Secretary
HKIC will also host a roundtable for international sovereign wealth funds and a summit on start-up investment to facilitate collaboration in the new financial year, which starts on April 1.
HKIC is widely perceived as Hong Kong’s version of Singapore’s Temasek.
The fund's planned investments will cover areas such as life sciences, green technology and finance, semiconductors and chips, as well as the upgrading and transformation of manufacturing industries, said Chan.
The investments involve companies founded or headquartered in different localities, according to a fund spokesperson.
“They [companies] have all shown confidence in Hong Kong as their obvious choice for future business growth, and commitment to bring long-term value to Hong Kong such as supporting the relevant Hong Kong ecosystem development and R&D (research and development) efforts, creating high-quality career development opportunities, and upgrading industrial structure,” the spokesperson told AsianInvestor.
“The HKIC is flexible in investment size and stages of investment, which will be decided on a case-by-case basis having regard to the strategic and financial value to be brought to Hong Kong, and other factors such as structuring of individual deals,” the spokesperson added.
HKIC was founded in late 2022 to make private investments to promote the city’s development in industries that the government identifies as strategically important, including life and health technology, AI, data science, fintech, advanced manufacturing, and new energy technology.
Its first chief executive officer Clara Chan took office in October 2023.
HKIC
Initial assets allocated to the corporation totalled HK$62 billion ($7.9 billion), consisting of the HK$22 billion Hong Kong growth portfolio, the HK$5 billion Greater Bay Area investment fund, the HK$5 billion strategic tech fund, and the HK$30 billion co-investment fund.
CHANNEL FOR CAPITAL
A planned roundtable for international sovereign wealth funds is also expected to burnish Hong Kong's appeal as a capital destination.
“Sovereign wealth funds and financial leaders will be invited to explore investment opportunities and develop collaborative partnerships,” Chan said in the budget.
HKIC is also preparing to organise a summit on start-up investing that aims to bring togther prominent figures in the start-up ecosystem and boost collaboration among the investment, industry, academic and research sectors.
That will help support innovation and technology enterprise development at varying stages, Chan said.
More details will be announced in due course, the HKIC spokesperson added.
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To perform its role of “channelling capital and leveraging market resources”, the financial chief said HKIC will also strive to attract more innovation and technology companies to establish their presence in Hong Kong.
“As part of the HKIC's ongoing efforts, we have been taking a proactive and bespoke engagement approach, so that different participants in the HKIC ecosystem, including our strategic partners, investment partners and portfolio companies based in or outside Hong Kong, could benefit from the HKIC's network as well as ongoing information and experience sharing,” the fund’s spokesperson said.
GOOD LOCATION
HKIC is closely collaborating with the government’s Office for Attracting Strategic Enterprises (OASES) and Invest Hong Kong to bring in new tech firms to the city.
Its co-investment fund will be used to invest in individual projects of these enterprises, taking into account their potential to drive local industry development.
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Analysts see potential for HKIC to invest in tech firms from mainland China in various sectors.
PwC
Wilson Chow, PwC’s global technology, media and telecommunications industry leader noted that innovation and technology companies from mainland China have been striving to expand their operations overseas by exporting their technology, services and products, especially in the South East region.
These companies belong to areas such as e-commerce, gaming, internet services, and the electric vehicle ecosystem.
“Hong Kong is an ideal hub given its geolocation in the region, its connection with mainland China, and ease of establishing and operating businesses,” Chow told AsianInvestor.
Multinational companies and startups from Europe and the US looking for expansion into the mainland China market might also favour Hong Kong as a base.
Echoing Chow’s remarks, Jeckle Chiu, corporate and securities partner at Mayer Brown believes clinical trial stage biotech companies, and commercialisation-stage companies in AI, semiconductors, new retail, and new manufacturing are all areas with potential to establish offices or R&D centres in Hong Kong.
So far, about 40 strategic enterprise partners have agreed to set up businesses or expand operations in Hong Kong, invest more than HK$40 billion ($3.8 billion) in Hong Kong and create about 13,000 jobs in the coming few years, according to the latest budget.
Most of these firms are from the Chinese mainland.
Among international companies, UK-headquartered biopharmaceutical enterprise AstraZeneca set up an R&D centre and an incubation platform iCampus in Hong Kong in collaboration with the government in November 2023.