The Hong Kong Investment Corporation (HKIC), which manages HK$62 billion (US$8 billion), is set to make its first investments in startups this month, as the government seeks to boost innovation and technology as pillars of the city’s sustainable economic development.
“This month we will make our first direct investments or co-investments in a number of start-ups in three key areas: hard and core technology, biotechnology, and new energy and green technology,” HKIC CEO Clara Chan Ka-chai said in her first interview since taking up the role in October.
SmartMore Inc., a domestic unicorn in the artificial intelligence (AI) field, is being named as a candidate for the first round of investments, according to sources familiar with the matter who asked not to be identified as the transactions are private.
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HKIC is scheduled to sign a strategic cooperation agreement with Smartmore on Wednesday to promote industrial development in the Guangdong-Hong Kong-Macao Greater Bay Area, according to people familiar with the matter.
Clara Chan Ka-chai, CEO of the Hong Kong Investment Corporation (HKIC), posted for a photo shoot at her office in Pacific Place One Admiralty on June 5, 2024. Photo by Enoch Yiu alt=Clara Chan Ka-chai, CEO of the Hong Kong Investment Corporation (HKIC), posted for a photo shoot at her office in Pacific Place One Admiralty on June 5, 2024. Photo by Enoch Yiu>
Established in October 2022, HKIC manages four funds, including a HK$30 billion co-investment fund established to attract businesses to Hong Kong through investment in companies. Other funds include the HK$32 billion Hong Kong Growth Portfolio, which includes the HK$5 billion Strategic Technology Fund, and the HK$5 billion Greater Bay Area Investment Fund, which focuses on investment opportunities in the developing region including Hong Kong, Macau and nine cities in mainland China’s southern Guangdong province.
In his 2022 Policy Address, Chief Executive Lee Ka-chao announced the establishment of the HKIC, which will utilize government reserves to fund Hong Kong’s economic and industrial development.
HKIC will also be responsible for managing a separate fund aimed at investing in start-ups for applicants under the Capital Investment Entry Scheme (CIES), which the government launched in March.
The CIES, commonly known as the Investment Migration Scheme, offers a faster route to Hong Kong residency for people who invest at least HK$30 million in the stock market, bonds or non-residential real estate.
“We only invest in companies that have the potential to deliver good returns on investment, but they must also contribute to leveraging capital to encourage technology companies to use Hong Kong as a development base,” Chan said, declining to name the investments due to confidentiality reasons.
Chan and her team have been meeting with start-ups and potential partners, from startups to listed companies, since taking up the post in October 2023. HKIC aims to grow its staff numbers to 50 as it builds its deal pipeline.
“HKIC will continue to sign more deals every quarter, as well as forge partnerships with key companies to establish Hong Kong’s ecosystem and encourage more technology companies to utilize Hong Kong as a development base,” she added.
HKIC’s board is chaired by Financial Secretary Chan Mo-po, whose appointment, a former executive director of the Hong Kong Monetary Authority, followed a global search.
Chan expects investments in the CIES scheme to be focused on rounds B or C of startups’ funding. Startups have multiple funding stages. Seed funding is the earliest funding stage raised from angel investors, friends, family, and the original company founders. This is followed by subsequent funding stages called Series A, Series B, Series C, etc.
“We’ve found that many startups don’t have a hard time raising seed money or what’s called a round A, and they don’t have a problem raising money even in the run-up to going public. But many companies struggle to raise money in between, and we want to fill that gap,” she said.
Aside from investing, HKIC will also be responsible for organising events to promote the use of technology, such as a major technology conference in September and an international sovereign wealth fund roundtable in January next year.
In June, the company plans to launch a program to introduce AI large-scale language models with capabilities such as text recognition and generation.
Chan stressed that HKIC would not act as a bailout fund to prop up the stock market.
“HKIC has no responsibility to prop up the downturn in the market. However, if investment opportunities arise from low valuations of listed companies, we would consider investing,” she said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative news source on China and Asia for more than a century. For more SCMP articles, visit the SCMP app or follow SCMP on Facebook. twitter P a g e Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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