PE of 300 billion, officially joins hands with Zheng Zhigang

A signing ceremony was held in Hong Kong—

The investment community has learned that recently, the European investment giant Tikehau Capital and Flow Capital, co-founded by Zheng Zhigang, signed a strategic cooperation agreement in Hong Kong, China. The two sides will join hands to target the Asian and European markets.

Founded in 2004, Tikehau Capital has assets under management of 44.4 billion euros (over 300 billion yuan), firmly establishing itself as a European PE powerhouse. With this cooperation, Tikehau Capital's Hong Kong office is established, marking its first office in the Greater China region.

Behind the seemingly unfamiliar Flow Capital stands Zheng Zhigang, the third-generation heir of the Zheng family from Hong Kong.

European private equity (PE) firms establish offices in Hong Kong, joining forces with Zheng Zhigang.

More details of the cooperation have emerged.

Both parties stated in a declaration that, under the new partnership, Tikehau Capital and Flow Capital will collaborate to drive growth in the vibrant markets of Asia and Europe by leveraging synergies within their respective investment platforms and across regional and global ecosystems.

Specifically, based on Flow Capital's extensive local network of partnerships and family offices in Greater China and Tikehau Capital's institutional relationships and strong track record, the two sides will jointly explore promising investment opportunities.

From the declaration, it is evident that Hong Kong's family office resources are one of the factors driving the cooperation between the two parties.

This can be traced back to 2022 when the Hong Kong Special Administrative Region government set a clear goal in its Policy Address to assist no less than 200 family offices in setting up or expanding their businesses in Hong Kong by the end of 2025. Subsequently, Hong Kong launched policies to attract family offices, with the establishment of the Hong Kong Academy of Wealth Management being a landmark initiative.

The Chairman of the Board of Directors of the Hong Kong Academy of Wealth Management is Zheng Zhigang, the CEO of New World Development, who has close ties with Flow Capital, the partner in this cooperation.

Information indicates that Flow Capital is an affiliated company of Astera Capital Partners, founded by Zheng Zhigang. Liu Gensen, co-founder and chairman of Flow Capital, also attended the signing ceremony.

On the other hand, Tikehau Capital is also a significant player. Established in 2004, Tikehau Capital is headquartered in Paris, France, and primarily invests in private debt, private equity, real estate, as well as equities and bonds. With assets under management reaching €44.4 billion (over ¥300 billion), it is one of the fastest-growing asset management companies in Europe.

Recently, Tikehau Capital announced in its latest financial report its accelerated expansion into the Asian private credit market, with plans to open an office in Hong Kong this year, marking its first office in the Greater China region following its offices in Singapore, Seoul, and Tokyo.

The newly established Hong Kong office of Tikehau Capital will be its 17th globally and the fourth in Asia after Singapore, Seoul, and Tokyo.

"The new partnership and the opening of our first office in Hong Kong signify an exciting phase of expansion for us in this vibrant region," said Bruno de Pampelonne, Chairman of Tikehau Capital Asia, and Jean-Baptiste Feat, Co-Head of Asia. They added that the Asia-Pacific region holds immense potential and is a focal point of their future strategic growth roadmap.

Who is Zheng Zhigang?

Looking back at this cooperation, Zheng Zhigang has left a deep impression on the public.

As the Chairman of the Board of Directors of the Hong Kong Academy of Wealth Management, he not only appeared at the signing ceremony but also announced the collaboration on his social media, expressing "pleasant cooperation."

Hong Kong is currently striving to consolidate its position as a global financial center, and Zheng Zhigang bears a heavy responsibility in this regard. The Hong Kong Academy of Wealth Management, led by him, is a platform established by the Hong Kong Special Administrative Region Government through the Hong Kong Monetary Authority, aiming to lead and establish Hong Kong as a leading international hub for family offices.

At the beginning of his tenure, Zheng Zhigang stated that he would establish partnerships with global counterparts to maximize synergies and create the best value for the family office industry.

As the eldest son of Henry Cheng, the successor of New World, Zheng Zhigang was born in 1979. At the age of 13, he went to study in the United States and four years later, he was admitted to Harvard University to major in literature. After graduation, he went to Japan alone and spent a year at the Stanford Kyoto Research Center studying culture, philosophy, and art.

Why didn't he choose economics? Zheng Zhigang explained in an interview, "I believe that humanities, history, and anything related to worldview need to be systematically studied at a young age, which is the foundation of doing things."

Later, Zheng Zhigang worked for top investment banks such as UBS and Goldman Sachs. In 2006, as the eldest grandson, he voluntarily chose to return to the family and, combining his studies and passion for art, devoted himself to building the K11 Art Mall. In 2021, he officially took over as chairman of the board from his father, becoming the third-generation successor of the New World Group.

Zheng Zhigang is most familiar in the venture capital (VC) circle for founding C Capital. In 2017, he and his cousin, Adrian Cheng, co-founded C Capital, which has since invested in well-known companies such as XPeng Motors, NIO, SenseTime, SHEIN, iCarbonX, and Huolala. In September 2023, C Capital announced the completion of a new round of financing, exceeding $250 million, approximately ¥1.8 billion.

In the Hong Kong financial circle, giants like New World are often regarded as Old Money, but Zheng Zhigang does not heavily rely on traditional industries of his family, instead directing more funds towards emerging industries.

"On the surface, they are relatively diversified in the public market, even setting up several different family offices to do different things, and they are more active in private equity investments," revealed an insider in the Hong Kong industry.

Competing for global billionaires, attracting top global financial institutions

As the first four months of 2024 have passed, Hong Kong remains competitive—recruiting talent with one hand, seizing industries with the other, and continuing to reclaim the glory of being a global financial center.

The "Entrant Investor Scheme for New Capital Investors," targeting high-net-worth individuals, officially began accepting applications in March. In just over a month, it has received applications in double digits and over 1,600 inquiries. Qualified applicants under this scheme must invest at least HK$30 million in permissible investment assets, targeting wealthy individuals globally.

There are also high-end talents. According to the Hong Kong government, since the implementation of multiple "talent attraction" plans, as of the end of March this year, there have been about 110,000 talents coming to Hong Kong through various talent programs. Among them, the "Talent Admission Scheme" targeting high-educated talents has received a total of 77,000 applications, of which 62,000 have been approved. This single scheme alone can bring about HK$34 billion in direct economic contribution to Hong Kong annually.

In addition, Hong Kong has also introduced a series of measures to attract businesses, including developing the "headquarters economy" and attracting companies from home and abroad to establish headquarters/branch operations in Hong Kong. Prior to this, Hong Kong set a target of attracting around 1,100 companies in total, including leading and innovative enterprises.

However, in recent months, Hong Kong has shown particular enthusiasm for family offices. According to a set of data, as of the end of March this year, the Hong Kong Special Administrative Region Government has assisted 64 family offices in setting up or expanding their businesses in Hong Kong, and 136 family offices are preparing or have decided to settle in Hong Kong.

After all, the competition for family offices is essentially a competition for the wealthy families behind them. By attracting the establishment of family offices, the concentrated wealth managed by these offices flows into the local economy. Therefore, not only Hong Kong but also cities in other regions such as Singapore and the Middle East are making every effort to attract global high-net-worth clients.

In recent years, Dubai has taken significant measures to maintain favorable tax policies, especially in the area of family offices, by establishing a comprehensive and clearer legal framework for family offices. According to a report by Henley & Partners, by the end of 2023, it is expected that the entire United Arab Emirates will attract 4,500 new millionaires.

As early as 2019, Singapore introduced tax incentives for funds, and in April 2022, announced updated provisions for the tax exemption schemes under Sections 13O and 13U for funds managed directly by family offices. As of December 31, 2023, about 1,400 single-family offices in Singapore have received tax incentives.

Behind all this is a consensus — attracting more family offices is crucial for consolidating the status of a global financial center. The most immediate impact is the increase in local wealth.

On the other hand, the assets managed by these family offices are usually used in investment, charitable donations, tax planning, and other areas, which are also crucial for the development of local industries. Generally speaking, family offices tend to prefer investing in industries such as technology, healthcare, internet consumption, enterprise software, and financial technology, providing a continuous stream of funds for emerging industries.

This is a far-reaching competition.