With the strong backing of State policies, China Everbright Ltd contributes to Hong Kong’s capital market with cross-boundary investments and asset management. Pamela Lin reports.

Zhao Wei, executive director and chief executive officer of China Everbright Ltd. (PARKER ZHENG / CHINA DAILY)

Funds from both the Chinese mainland and overseas have played a pivotal role in reshaping Hong Kong’s capital market, and bridging East and West, particularly in the 22 years since Hong Kong returned to motherland. 

Adhering to its motto “The Power to Transform”, China Everbright Ltd — the Hong Kong-listed financial arm of the State-owned Chinese mainland  conglomerate China Everbright Group — has been acting as a bridge in promoting cross-boundary asset management and private equity investments. 

In more than two decades of development, CEL, founded in 1997, has been keeping up with the pace of change and staying relevant to national strategies and global economic changes. As the Hong Kong financial flagship of China Everbright Group, CEL features prominently in cross-boundary investments and asset management, offering diversified financial services for Chinese and overseas clients. 

Through global mergers and acquisition funds, we integrate global resources and introduce advanced technologies overseas for China’s industrial upgrading

Zhao Wei, executive director and chief executive officer of China Everbright Ltd

“Through global mergers and acquisition funds, we integrate global resources and introduce advanced technologies overseas for China’s industrial upgrading,” said Zhao Wei, CEL’s executive director and chief executive officer. 

Four industry platforms

CEL strategically targets four industry platforms — aircraft leasing, the Artificial Intelligence and Internet of Things (AIoT), elderly care and real estate. It also has its finger on the pulse with regard to the nation’s major development strategies, such as the Belt and Road Initiative and the mega Guangdong-Hong Kong-Macao Greater Bay Area development.  

“From technology, transportation to housing and elderly care, the full set is aimed at the good life which according to us, is China’s direction of future development. And, we invest and incubate companies concerning the four industries to upgrade them as a whole, said Zhao. The platforms provide substantial room for industrial mergers and acquisitions, integration and upgrading. “We see it as our features and advantage by using the industrial platform to foster and facilitate PE development,” Zhao noted. “Only a few general partners have similar strategies.”  

Bay Area development

Riding high on the Bay Area’s development, CEL is paying close attention to the market and extending its network in the region.

CEL has 42.1 billion yuan in assets in the Bay Area, posting a net profit of 5 billion yuan and income reaching 11 billion yuan from 2016 to 2018. The portfolio focuses on some 15 companies in the fields of financial services, healthcare and medical facilities, biological pharmacy, technology hardware, semiconductors and TMT (telecommunications, media and technology). 

“Regarding the opportunities created by the Bay Area, we plan ahead of what governments and companies in the Bay Area need to do through private equity,” said Zhao. 

Since the founding of the People’s Republic of China in 1949, and the 40 years of reform and opening-up, the nation has seen great development as the world’s second-largest economy, and as a big world power in the financial capital market, he said. 

However, the national economy’s securitization ratio is about 60 percent which has upside potential, compared with the international market and signs a huge room of development for China’s capital market, he explained. In addition, Chinese enterprises need to further promote and develop technological innovation ability as a core competency. 

New growth points  

In the past few years, CEL has been facilitating technological innovation by bringing in overseas technologies to China, as well as incubating its own high-tech company — Terminus Technology, a Chinese AIoT unicorn enterprise. 

“In the recent two years in the PE industry, from fundraising to project investment, the capital has been drastically reduced and we have been affected as well,” Zhao said. But, CEL bucked the trend.

As the end of June this year, CEL had 64 funds with assets under management of HK$145.4 billion — up by HK$1.9 billion compared to the end of 2018. The income from management fees surged 26 percent to HK$486 million, suggesting the company’s growing ability in asset management.  

Amid the global economic downturn pressure and uncertainties in the world’s investment environment due to the protracted US-China trade tensions, together with internal changes as China instituted structural economic adjustments, Zhao said CEL is actively finding its own way out to cope with the external challenges by seeking new growth points and plan ahead. 

The company’s Hong Kong-listed aircraft leasing arm, China Aircraft Leasing Group Holdings, is setting up an “Air Silk Road Fund” to expand its fleet size with the support of fund management expertise from CEL. “We’re also exploring the European market, and there’s plenty of room for potential development and cooperation to the south and to the west,” Zhao said.  

Looking ahead, CEL is determined to make strides in tandem with the BRI for overseas development and take advantage of the opportunities created by the development of the country’s three strategic regions — the Bay Area, the Yangtze River Delta and the Beijing-Tianjin-Hebei region. Besides, the company will continue to focus on alternative asset management to stabilize its earnings and management income.

“With the strong backing of the nation’s preferable policies and CEL’s parent company, China Everbright Group, which bring synergistic advantages, we also aim to take the opportunity to propel ourselves to transform and adjust to become a more efficient and valuable entity with great foresight,” Zhao said.   

Contact the writer at pamelalin@chinadailyhk.com