MSPEA nets 4.5x return on part-exit from Hong Kong's AMTD

Minsheng announced last September that it would establish a comprehensive strategic alliance with AMTD in order to build a platform for cross-border investments. LR Capital, described as a strategic shareholder in AMTD, is an alternative asset manager seeking to connect China with international markets, predominantly focusing on financial services.

MSPEA acquired a majority stake in AMTD in October 2014 for an undisclosed sum. With the entry of Minsheng and LR, it reduced its holding to 9.9%, returning $94.2 million, including dividends, according to a source familiar with the situation.

Given the wave of acquisitions in Hong Kong's non-banking financial services space by mainland companies seeking to create or enlarge an offshore footprint, it is a logical exit route. Also last year, for example, China Minsheng Banking Corporation bought Hong Kong-based brokerage and wealth management business Quam, while Everbright Securities took a majority stake in Sun Hung Kai Financial.

AMTD was set up in 2003 by Cheung Kong Group and Alan Tsang - still the company's CEO - was hired to execute the strategy. Tsang was previously head of American Express in Hong Kong. Cheung Kong owned 61.25% of the business and Commonwealth Bank of Australia (CBA) came in as a 30% shareholder, in order to offer experience of the Australian independent financial advisor (IFA) model.

Insurance broking and asset management were added to the IFA offering, as well as to a lesser extent mortgage-broking and money-lending. With AMTD looking to build its asset management capabilities, when CBA sold its stake to Cheung Kong and the management team, MSPEA was a logical new partner. Cheung Kong swapped its majority position for a minority one to accommodate the PE firm.

Initiatives such as the Hong Kong-Shanghai Stock Connect program, which enables investors in Hong Kong and Shanghai to trade in each other's markets, underline the long-term appetite for international diversification in China. They also suggest that AMTD's future may lie in investment services for high net worth individuals (HNWIs). Its sweet spot is clients with investable assets of $1-5 million.

Minsheng, through its mainland parent, is expected to help AMTD reach more clients in China who are looking for cross-border services. The company is an overseas arm of China Minsheng Investment (CMI), which was set up in 2014 with a view to becoming a leading international financial private investment group. It is backed by 59 Chinese enterprises and has RMB50 billion ($7.7 billion) in registered capital.

LR Capital was set up by several family business groups in Hong Kong, China, Taiwan and Canada. Its senior advisors include Soul Htite, co-founder of peer-to-peer lending sites Lending Club and Dianrong.com, and Marcellus Wong, formerly a partner and Asia Pacific head of tax risk and quality advisory at PwC. Investments range from a $136 million commitment to Hong Kong-listed China Taiping Insurance to participation in a Series A round for US internet finance platform Credible.com.

Around the time the Minsheng-LR investment was announced, AMTD said it would partner with China Minsheng International Financial Leasing Corp. and Dianrong to establish a cross-border online trading platform for securitized financial products in mainland China, Hong Kong or broader Asia.

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• Topics
• Greater China
• Trade sale
• Financials
• Hong Kong (China)
• Morgan Stanley Private Equity Asia
• Exit
• Financial Services