Private equity central to success: FS

With significant relaxation of anti-epidemic measures, and more importantly the reopening of our boundary with the Mainland and the world, Hong Kong is fully open for business.


This is a golden opportunity for speedily gearing up ourselves to maximise the opportunities ahead. We are determined, let me add, to strengthen our competitiveness in a wide and welcoming range of sectors. That very much includes the asset and wealth management sector.


At the end of 2021, Hong Kong’s asset and wealth management holdings exceeded US$4.5 trillion. And 65% of that was sourced from non-Hong Kong investors. Hong Kong, in short, is Asia’s premier asset and wealth management hub.


Private equity (PE) is central to our success. At the end of September last year, assets under management by our PE firms were close to US$200 billion. That put Hong Kong second in Asia, only after the Mainland.


But competition among financial centres is very keen. We know we must work persistently to strengthen our competitive advantages so as to maintain our leading status. Indeed, this Government has been working to boost that enviable standing in a variety of ways, including modernising and diversifying our fund structures, ensuring an enabling tax environment, expanding fund distribution networks and developing Hong Kong’s family office business.


We have also been working to enhance the legal and regulatory environment conducive to the development of the PE industry. For example, the series of listing reforms in recent years, including the listing of new economy companies with weighted voting rights structure and pre-revenue/pre-profit biotechnology companies in 2018, as well as the introduction of special purpose acquisition companies last year, have all contributed to developing a vibrant PE ecosystem.


We are also taking full advantage of the national policy of the Greater Bay Area development, to help the sector to capture opportunities in the region. For example, in collaboration with the Shenzhen Qianhai Authority, we rolled out 18 measures to support Hong Kong’s PE firms to access the bay area market.


I do not have to tell you that family offices present great promise for Hong Kong, creating fresh funding sources and co-investors for our PE and venture-capital industry. That means for you and your business.


To that end, we introduced a bill into the Legislative Council last month to provide tax concessions for family-owned investment holding vehicles managed by single family offices in Hong Kong, effective from the 2022-23 year of assessment.


Ladies and gentlemen, all the efforts and developments outlined above have demonstrated the strong promise and bright prospects of your sector. I am sure you will hear more enlightening perspectives on various dimensions of the sectors development in Hong Kong, the Mainland and beyond from distinguished speakers in this forum.


In just over a week, we welcome the arrival of the Year of the Rabbit. The rabbit, I am told, symbolises “peace and prosperity.” That sounds like my kind of year – a year of hope and promise for us all.


Financial Secretary Paul Chan gave these remarks at the Hong Kong Venture Capital & Private Equity Association Asia Private Equity Forum 2023 on January 13.