Asia > Eastern Asia > Hong Kong > Hong Kong Private Equity

Hong Kong: Hong Kong Private Equity

2011/03/30

Overview

Private equity is an asset class investing in equity of non-publicly traded companies. The common investment strategies of private equity firms include, but are not limited to, venture capital, leveraged buyouts, growth capital, and distressed investment. Venture capital is one of the most popular strategies used by private equity firms in Hong Kong.
Hong Kong is the largest private equity centre in Asia, providing local and regional start-up companies with a readily available source of equity financing.
The majority of private equity funds in Hong Kong come from overseas and invest in companies in the region. It is estimated that they account for nearly one-third of all equity capital raised in Asia.
Hong Kong's stock markets offer easier exits for venture investments. Among private-equity-backed IPOs, the Hong Kong Stock Exchange has hosted a major share of Chinese mainland investors’ sales.

Industry Data

	2006	2007	2008	June 2009
Number of private equity firms	199	288	294	317
Estimated number of private equity professionals	592	602	619	720
Capital under management (US$ million)	47,880	52,010	55,433	56,260

Source: Asian Venture Capital Journal

Private equity is an asset class investing in equity of non-publicly traded companies. The common investment strategies of private equity firms include, but are not limited to, venture capital, leveraged buyouts, growth capital, and distressed investment. Venture capital is one of the most popular strategies used by private equity firms in Hong Kong.

Range of Services

Hong Kong is the largest private equity centre in Asia, managing about 24% of the total capital pool in the region. According to the latest available figures, there were 317 Hong Kong-based funds with capital under management amounting to more than US$56 billion as of June 2009.

Service Providers

Based on the latest available figures Hong Kong had a pool of 720 private equity professionals as of June 2009, the third highest in Asia. Many of the region’s top private equity firms have a presence in Hong Kong and are experienced in supporting each stage of venture capital funding from start-up to initial public offerings.

Exports

Hong Kong's private equity industry is highly export-oriented. The majority of the regional funds are based in Hong Kong. An overwhelming majority of private equity funds in Hong Kong come from overseas and invest in companies in the region, including Australia, Singapore, India, Korea, Japan and the Chinese mainland.

Industry Development and Market Outlook

The Chinese mainland is increasingly the focus of venture capital investment in the region. Hong Kong's private equity industry has developed strong expertise of investing in Asia, in particular the mainland. Mainland-related investment provides a major theme for Hong Kong's venture capital fund-raising activities.

Hong Kong’s Mandatory Provident Fund (MPF) scheme provides an ample supply of funds to the industry. Insurance companies and pension funds, which play vital roles in directing MPF funds to various investment opportunities, represent a significant source of funds for Hong Kong's private equity industry.

Financial services, telecommunications and computer related services accounted for more than 40% of private equity funds invested across Asia in 2008.