Hong Kong’s new wealth fund accelerates investments with AI push
The newly established Hong Kong Investment Corporation (HKIC) is rapidly deploying capital into artificial intelligence companies as it seeks to future-proof the city's economy.
Since unveiling its maiden investment on June 12, the HK$62 billion ($8 billion) government fund has made three AI deals – in Chinese startups in smart manufacturing, biotech, and robotics – in under two months, representing an accelerated pace of capital deployment.
This underscores Hong Kong’s role in China’s technology push amid rising tensions with the US.
“We are continuing to press ahead with our dual mandate, namely to seek reasonable financial return over the medium to long term, and more importantly, to invest for the future of Hong Kong by enhancing the long-term competitiveness and economic vitality,” an HKIC spokesperson told AsianInvestor.
The HKIC was launched in late 2022 to make private market investments that help to develop industries the government identifies as strategically important.
Initial themes of focus include hard and core technology, biotech, and new energy and green technology, the spokesperson said.
INDUSTRIAL ECOSYSTEMS
Most recently, on July 19, the HKIC announced a partnership with Beijing-based robot maker Galbot, which makes general-purpose robots that use embodied AI for manufacturing, retail, pharmacy, and home.
The HKIC will channel resources to support Galbot’s development in Hong Kong, while the startup will help establish a Hong Kong International Embodied AI Talent Exchange Centre, which aims to nurture over 500 professionals with relevant basic knowledge and skills.
It will also explore practical applications for robots in business, tourism, and other service use cases in Hong Kong.
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AI is becoming the technology behind the so-called fourth industrial revolution. Investments in related companies this year have been driving stock rallies across various markets globally, especially in the US, Japan, and Taiwan.
“HKIC is making headway in embodied AI that can empower various industries. This is not only to seize future investment opportunities, but equally important, to support the development of Hong Kong's relevant industrial ecosystem, new technologies, applications, and even new international standards and rules,” said Clara Chan, HKIC Chief Executive Officer, during a launch ceremony last month.
She said the fund will further accelerate and scale up its investments, as past groundwork done on building databases and project libraries has helped source high-quality projects and partners. Some projects have entered the stage of in-depth discussions.
In August, the HKIC will announce investments in green energy technology, she said.
Initial assets allocated to the Hong Kong government fund totalled HK$62 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.
Chan said the HKIC doesn’t disclose details such as deal size, citing commercial terms and market sensitivity.
“We will make appropriate announcement from time to time on our investment and activities,” the HKIC spokesperson said, without elaborating.
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“When selecting potential projects and partners, we will give priority to those companies that not only have the potential to succeed, but more importantly, these companies can significantly contribute to the development of other upstream and downstream industrial ecosystems, and can even drive the incremental demand of adjacent or related industrial chains, or ‘Platform Effect’,” Chan said at a biotech summit in Hong Kong in June.
BUILDING ECOSYSTEM
The fund’s maiden investment was in Hong Kong-based AI unicorn SmartMore, which was announced on June 12. The firm is based at the Hong Kong Science and Technology Park and specialises in smart manufacturing and digital innovations. Founded in 2019, SmartMore’s major clients include Apple, Tesla and BYD.
Its strategic partnership with HKIC will cover the entire AI industry chain and bolster talent development, and help enhance computing power and the wider application of large language models across the Greater Bay Area.
SmartMore will also establish Hong Kong’s first AI research institute, and promised to prioritise Hong Kong as a future listing location.
“We have strict requirements for every enterprise and partner. They must continue to participate in and actively contribute to Hong Kong's innovation and technology ecosystem, talent cultivation, and industry collaboration,” Chan said.
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Also in June, HKIC announced an investment in BioMap, a tech company that builds life science AI foundation models to design novel proteins and support relevant research and development (R&D). The firm was co-founded by Baidu co-founder Li Yanhong.
BioMap is one of the firms that work with Hong Kong government’s Office of Attracting Strategic Enterprises (OASES) to set up business in Hong Kong.
Since its inception, the HKIC has been collaborating with the OASES and Invest Hong Kong to bring in new tech firms to the city.
The fund plans to utilise its resources to support BioMap’s development in Hong Kong and overseas, while BioMap will launch an accelerator program called BioMap BioX to support over 50 early-stage life science R&D projects in Hong Kong over the next five years.
It also agreed to prioritise Hong Kong for a future initial public offering.
BioMap’s partners in Hong Kong include the University of Hong Kong, Hong Kong University of Science and Technology, Hong Kong Cyberport Management Company, and Hong Kong Science and Technology Parks Corporation.
The HKIC will soon have a fifth fund with capital from the government’s Capital Investment Entrant Scheme (CIES), which offers migration opportunities for people who invest at least HK$30 million in designated non-residential property assets in Hong Kong.