Focus on alternatives continues to grow with Hong Kong financial group Sun Hung Kai & Co pivoting its focus to even emerging asset classes like cryptocurrencies, according to its fund management CEO Lindsay Wright in a conversation with finews.asia.
Once a local brokerage giant, Sun Hung Kai & Co (SHK & Co) sold the business to mainland financial firm Everbright five years ago and thereafter cast its sights on achieving a key objective: diversification.
«A strategic decision was made through 2019 and 2020 to expand and pivot to funds management with a focus not only on adding new revenue streams but also to diversify our products and strategies,» said Lindsay Wright in an interview with finews.asia about investing and partnering with alternatives managers.
Full Universe
Global investors are increasingly placing greater emphasis on alternatives as markets grind higher in the middle of a historic health crisis. According to a recent UBS survey, family offices are allocating an average of 35 percent in the asset class with 69 percent viewing private equity as the key driver of returns.
And in Asia, the spotlight on alternatives has extended beyond traditional options to the fringe. Notable examples include the industry’s crypto foray by major players like DBS with its digital exchange or Asia-focused lender Standard Chartered with its custody services.
«We are not only focused on investing in and partnering with hedge funds but also across the entire alternatives spectrum including private equity, venture capital, real estate, private credit and even emerging asset classes such as cryptocurrencies,» Wright said. «This is not to say we will not consider long-only managers but they will have to be quite compelling and high conviction.»
«Patient Capital»
According to Wright, the nature of SHK & Co's capital is where it has an edge over more traditional seeders of managers which often have a three-year lock-up period and requirements to recycle capital.
«In the case of SHK & Co., that is not necessary. Even when we come out of the lock-up period, if we are confident in the investment strategy and we have the appropriate returns on our capital, we will not recycle for the sake of it,» Wright explained.
«What really differentiates us from other conventional seeders is that we provide patient capital and can be flexible and innovative in how we structure such partnerships.»
Collaboration Methods
For alternative managers collaborating with SHK & Co, Wright said that there will be four methods for different profiles: in-house incubation at SHK & Co for teams that are not ready to launch; seeding new managers; acceleration capital for those that need to boost growth in an existing strategy or launch a new strategy; and investing in an existing manager.
Last month, SHK & Co’s funds management platform announced a $150 million seeding partnership with East Point Asset Management and a $15 million commitment with global tech venture capital firm E15VC.
The Godfather of the Stock Market
SHK & Co was established in 1969 by Sun Hung Kai Properties founder Kwok Tak Seng, Henderson Land chairman Lee Shau Kee and Fung King Hey, a renowned local financier once dubbed as «the godfather of the stock market» in Hong Kong. The firm currently has more than 200 branches and offices across Hong Kong and mainland China.
