HONG KONG finance company Sun Hung Kai & Co. has made US$2 billion available over two years for investments in financial technology, medical and consumer-facing companies, as noted by the firm’s chief investment officer, Sebastiaan Van Den Berg.
— Lulu Yilun Chen (@luluyilun) May 10, 2017
The CIO added that the target size of the fund should grow over the next 24 months from its current HK$11 billion (US$1.4 billion) size, and the company hopes to be able to reap 15-20 percent in profit, whether it be debt or equity. The company is considering listing its subsidiary United Asia Finance Ltd. (UA) in order to fundraise an estimated US$500 million, according to a Bloomberg source. This entity currently makes up for a third of Sun Hung Kai’s assets.
Sun Hung Kai’s strategy of offering technology investment products will definitely give the company an edge, particularly since all across mainland China, technology stocks are boosting economic growth. Tech giants are leading record-high investment numbers in Asia, driven by strong consumer demand in the increasingly wealthy region.
Among some of them are tech darling Didi Chuxing, smartphone manufacturers Xiaomi Corp., and finance platform, Wacai.com. Each company boasts an investment from Sun Hung Kai, whose principal investments have delivered returns of 10 percent.
“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 to Bloomberg.
In particular, Sun Hung Kai is turning to fintech. Asia Pacific has seen fintech financing shoot up over the last few years; 2016 saw those numbers achieve US$11.2 billion, surpassing North America’s US$9.2 billion and Europe’s US$2.4 billion.
Going the way of fintech
Tech in Asia highlighted three major reports – the “Global Financial Centers Index”, the “KPMG 2016 Pulse of FinTech” and “Deloitte’s Connecting Global FinTech: Interim Hub Review 2017”- that noted not only was Asia’s fintech prominence rising, it’s due to snatch the crown from its current ruler, the US.
There is strong evidence that Asian businesses will see more capital, influence and attention come their way in the next few years as their markets mature. Already, Hong Kong is notable for its battle with Singapore and London for pole position in the financial world. Already, the effects of the United Kingdom’s vote to leave the EU are visible as banks are making plans to move out of London and into other banking cities in Germany, France and Spain.
Asia, on the other hand, has benefited from lots of attention from fintech firms such as Airwallex, and TransferWise, while Japan’s been making waves with their plans to set up banking blockchains.
The Global Centers report details the various change in rankings of financial hubs in the world. The index – which surveys more than 100 financial centers and takes into account feedback from 3,000 industry professionals – notes that 11 Asia Pacific financial centers have seen their rankings improve, including Sydney, Singapore, Hong Kong and Tokyo. In comparison, seven European ones lost their ranks, including traditional favorites Zurich and Luxembourg.
Though London and New York kept their rankings as the top financial centers in the world, the election of Donald Trump and the Brexit vote factored in significantly into their weakening positions. Deloitte’s report noted that Singapore and London had tied for the qualities of their centers in 2016.
The KPMG report noted that total fintech investments in the US fell from US$27 billion to US$12.8 billion in 2016, while Europe saw its overall numbers fall to roughly a fifth of its original US$10.9 billion value.
This is compared to Australia’s triumphant tripling numbers (the sector registered US$656 million in investments in 2016) and Asia’s totals achieving US$8.5 billion.
Asia, on the other hand, saw total investments rise slightly from US$8.4 billion in 2015 to US$8.5 billion in 2016. As a subset of this, Australia’s fintech investments more than tripled from US$185 million in 2015 to US$656 million in 2016.
Evidently, Asia Pacific’s fintech star is rising, due to factors such as low costs, strong financial regulation policies, as well as governmental investments, as is the case in countries such as Japan, China, Malaysia, and Singapore. Meanwhile, Australia and New Zealand benefit from high levels of corruption-free business environments and dynamic startup growth.