CVC Capital Partners backs Sun Hung Kai Financial

“We think financial services is a very exciting growth area in China and in Hong Kong,” Roy Kuan, Managing Partner of CVC Asia, told AVCJ. SHKF, with no connection to the property company of the same name, is a highly respected player in the space in Hong Kong and Greater China. Sun Hung Kai Financial is Hong Kong’s oldest and largest independent brokerage and wealth management company with over 20 years of consecutive profits.

CVC’s commitment, in the form of convertible notes and warrants, gives the firm a 19% share of SHKF, post a planned internal restructuring that involves the sale of SHKF’s 38% stake in Tian An China Investments, a PRC property developer. The disposal of Tian An will make SHKF a pure play financial services company.

CVC and SHKF will then use the investment capital to assist in the rollout of United Asia Finance Ltd. (UA Finance), SHKF’s consumer finance unit, which gives loans to customers without going through banking channels. “The consumer finance business has grown very consistently over the past ten years in Hong Kong, and they did a very successful expansion in southern China,” he noted. “The company would like to further expand into other cities in China.”

SHKF already has excellent access to funding, but is viewing the CVC investment more as a strategic investment. As part of its commitment, CVC will be more actively involved in helping the company than a normal investor. CVC will have three board seats, as well as seats on various committees of the company.

The other key aspect of the deal is the appointment of Francis Leung, Chairman of CVC in Greater China and former Asia chairman for Citigroup Capital Markets, as a non-executive director of SHKF. Leung has a longstanding reputation as a financial markets leader in Asia Pacific, and he “could provide invaluable assistance and advice with respect to the ongoing development of SHKF’s institutional sales and corporate finance platforms,” according to SHKF’s materials.

“Private equity and CVC in particular is regarded as a partner by many leading local corporate groups,” Kuan concluded. “Almost all of our deals are partnerships with Asian corporates and families.”.

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• Topics
• Expansion
• Financials
• Greater China
• Roy Kuan
• CVC Capital Partners