Sun Hung Kai & Co. Seeking to Grow Investments to $2 Billion

  • Seeking investment in fintech, healthcare and consumer firms
  • Chief Investment Officer Van Den Berg says in interview

Sun Hung Kai & Co., a Hong Kong finance company, wants to expand its investment operation to $2 billion over the next two years by funding financial technology, healthcare and consumer firms, its chief investment officer said.

The unit, which currently has assets of about HK$11 billion ($1.4 billion), should grow to the new target size over the next 18 to 24 months, Sebastiaan Van Den Berg, Sun Hun Kai’s chief investment officer and head of principal investments, said in an interview last month in Hong Kong. It is seeking returns of 15-20 percent from the investments, which may take the form of debt or equity, Van Den Berg said.

“The principal investments business really gives us a way to capture the strategic opportunity for both our capital and the know-how of our business,” said Van Den Berg, 45, who joined Sun Hung Kai in September and previously worked at HarbourVest Partners LLC and Goldman Sachs Group Inc. Sun Hun Kai’s principal investments delivered a return of 10 percent in 2016, before cost allocation.

The principal investments operation is now the second-largest division of Sun Hun Kai after consumer finance, which is operated through its subsidiary United Asia Finance Ltd. It accounts for about one-third of Sun Hun Kai’s assets, compared with about 50 percent for UA Finance.

In 2015, the Hong Kong-based firm sold a 70 percent stake in its brokerage operation, Sun Hung Kai Financial Group Ltd., to China’s Everbright Securities Co. for HK$4.1 billion.

Sun Hung Kai is revisiting plans to list UA Finance in Hong Kong to raise an estimated $500 million, a person familiar with the matter said last month. There’s no definitive timetable for its separate listing, a company spokeswoman said in an email at the time.

Fintech Focus

Sun Hung Kai is investing in financial technology at a time when some of the Chinese giants are boosting investments in Asia to record highs and the region’s growing wealth is driving consumer demand.

Chinese ride-sharing giant Didi Chuxing, smartphone maker Xiaomi Corp. and finance platform Wacai.com were among companies that Sun Hung Kai has invested in, said Van Den Berg. It also invested in the privatization of WuXi PharmaTech Cayman Inc. in 2015 together with a group of investors.

Pushed by China’s “blockbuster deals” in 2016, Asia-Pacific financial-technology investments last year hit $11.2 billion and surpassed North America for the first time, Accenture Plc said in a report in February. North America attracted $9.2 billion, while Europe lured $2.4 billion.

The principal investments unit has 10 employees now and plans to add more staff in coming months, Van Den Berg said. The company is currently investing its own capital, and has the ability to either take equity stakes or offer loans to target companies, he said.

“It gives us more flexibility to basically have an economic relationship with a company either through equity or through debt," Van Den Berg said.
 

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE