Hong Kong’s US$8 billion wealth fund eyes fintech, aerospace and AI for growth

The Hong Kong Investment Corporation (HKIC) is eyeing investments in fintech, aerospace and artificial intelligence, tapping the city’s strengths and a wave of incoming talent and enterprises as geopolitical shifts create new opportunities, according to its CEO. The city’s wholly owned investment vehicle, which manages HK$62 billion (US$8 billion) in funds, would look at these new sectors in addition to its other focus areas, “playing to Hong Kong’s advantages in the context of the global competition”, Clara Chan Ka-chai said on Wednesday at the Asia Private Equity Forum. “As a long-term investor, you actually see through the cyclical challenges; you see great opportunities like valuations for you to go in,” she said, referring to geopolitics and other risks. As an institutional investor, HKIC was actively seeking co-investments from international institutions and identifying quality growth companies, Chan said. Its dual mandate to deliver financial returns while strengthening the city’s long-term competitiveness coincides with a period of rising geopolitical tensions and China’s drive for tech self-reliance, opening new investment opportunities. “We want to do more because of Hong Kong’s vibrancy, competitiveness and advantages – not only in innovation and technology, but also in other areas and industries where we believe we can add value,” Chan said. For example, the fund wanted to tap returning scientists and professors from US universities – many of them good at incubating companies and grooming students – and connect them with commercial resources in the market, according to Chan. She said that because of geopolitics, many scientists and professors from Stanford and Harvard universities were looking to come to this part of the world. “With Hong Kong’s international backdrop, it’s the first place they would like to come,” she said. “We can help them connect with the right resources commercially to make things work. I think that’s a very important complementary aspect we bring to the game.” HKIC made HK$2.34 billion in investment income in 2024, according to its first annual report released last month. It invested in more than 170 companies across its three initial focus areas: hard tech, healthcare and biotech, and green and new energy. More than 60 per cent of its deployed capital went to mainland China and over 30 per cent to Hong Kong. Every HK$1 invested by the HKIC attracted over HK$6 in long-term capital. The solid performance came as a recovery in the private equity sector, buoyed by Hong Kong’s resurgent stock and initial public offering markets, provided them with clear and credible exit pathways and improved companies’ valuations, Financial Secretary Paul Chan Mo-po said at the same event. There were increasingly attractive investment opportunities shaped by technology in the areas of AI, biotech and new energy in China, he said. “[China] places strong emphasis on technological self-reliance, and we can expect game-changing breakthroughs,” the financial secretary said. He added that Hong Kong would continue to develop innovation and technology as a growth engine, from supporting research and development and building infrastructure to nurturing start-ups and attracting talent. The city has attracted more than 100 strategic enterprises under a government initiative launched in 2022, with these companies expected to invest over HK$60 billion and create more than 22,000 jobs in the long term. “HKIC is ready to further collaborate with the private equity community to support high potential ventures,” said Paul Chan, who is also the chairman of HKIC. To attract more funds, the government would introduce a bill in the first half of this year to strengthen the preferential tax regime for funds, single family offices and carried interest, he said.