March 16, 2023
HONG KONG – Over 700 private equity funds have set up shop in Hong Kong in recent years, boosting more investment management and related activities, Acting Secretary for Financial Services and the Treasury Joseph Chan Ho-lim said Wednesday.
Answering a query at the Legislative Council, Lim said 120 open-ended fund companies, including 104 private funds, and about 600 limited partnership funds have been established in Hong Kong.
“Hong Kong is an international asset and wealth management center. As of end-2021, the asset and wealth management business of Hong Kong amounted to HK$35.5 trillion, with 65 percent of the funding sourced from non-Hong Kong investors,” Chan said.
“Hong Kong’s private equity capital under management as of end-2022 amounted to $208.3 billion, ranking second in Asia,” he added.
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Chan said the open-ended fund company regime has been in operation since July 2018, facilitating an OFC to be set up as a public or private fund.
OFCs have a diversified investment portfolio which covers asset categories of equities and fixed income bonds spanning Asia, the US, Europe and emerging markets, he added.
On the other hand, Chan said the Hong Kong Special Administrative Region government introduced the limited partnership fund regime in August 2020 to attract private investment funds to set up and operate in Hong Kong in the form of limited partnerships.
He added that LPFs also invest in a wide range of products, including shares, bonds, notes and other securities issued by private companies, property development, education.
In September 2022, the Shenzhen Qianhai Authority and the HKSAR government jointly promulgated the 18 Measures for Supporting the Linked Development of Shenzhen and Hong Kong Venture Capital Investments in Qianhai to provide facilitation and preferential policies for the Hong Kong PE industry, including supporting eligible Hong Kong LPFs to set up qualified investment entities in Qianhai to commence onshore investment.
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In February 2023, the Chinese mainland promulgated the “Opinion on Providing Financial Support for the Comprehensive Deepening Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone”, setting out 30 measures on financial reform and innovation, including measures to further support Hong Kong PE funds’ development in Qianhai.
“We will continue to maintain close communication with the mainland authorities to implement the relevant measures,” Chan said.
“Given Hong Kong’s strong community of investors and professional service providers, proximity to the mainland and active initial public offering market for conducting fundraising, deal sourcing and investment management activities, Hong Kong is an attractive domicile for funds,” he added.