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The future of alternative funds in Hong Kong

24 June 2019

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On 18 June, we hosted a briefing for fund managers on the future of alternative funds in Hong Kong. Industry experts from Orrick, KPMG, Lingfeng Capital and Radiant Tech Ventures joined our panel to discuss a range of key issues fund managers are facing in the region. Delegates were able to express their views in a live poll on how the private equity (PE) sector will evolve in Hong Kong. Here are some key insights from the event.

Positive outlook for PE sector in China over next 12 months

Almost 50% of respondents believe that China PE/ venture capital (VC) investment will increase over the next 12 months. This highlights that despite the increased macroeconomic and geopolitical uncertainty, the market sentiment towards China investment remains positive.

China’s Greater Bay Area (GBA) plays a vital role for alternative funds

Underpinning the positive outlook for PE in China are a number of key market reforms, one of which is the GBA. 85% of respondents believe that ongoing development of the GBA will present more investment opportunities for fund managers over the next three years. The GBA is fast becoming the new high-tech hub for China and its innovation-driven growth will unleash tremendous potential for PE/VC investment in the upcoming years.

Trade war poses risk to fund managers

Despite the optimistic outlook on China, there are still a number of issues keeping fund managers awake at night. 39% of respondents indicate the US/China trade war is currently their biggest concern. This is followed by increasingly complex regulatory developments and fundraising challenges.

Demand for an onshore PE fund regime in Hong Kong

There was a mixed response on the outlook for an onshore Hong Kong limited partnership vehicle for private equity funds. The good news is that 93% of respondents believe that a viable onshore fund regime for PE will exist in the future, but only 12% expect it will happen within the next 12 months. 29% believe it will take two years, while 50% think it will take up to five years.

How we can help

Intertrust is your strategic partner when it comes to tailored, holistic solutions to tackle the complex world of fund structuring, operational efficiency, governance and global regulation. We provide a full range of services covering the set up and administration of alternative funds. Contact our fund specialists to find out more.