Frank Tang, chief executive of FountainVest Partners, a US$1 billion Hong Kong-based private equity fund, has bet the farm on China making its long-heralded transformation from the world's workshop into a consumer-driven economy.
Tang founded FountainVest Partners in 2007 with a group of former colleagues at Singapore's sovereign-wealth fund Temasek Holdings, which was an anchor shareholder. Today, FountainVest Partners holds stakes in nine mainland companies, most of which Tang believes will profit from Beijing's plan to retool the economy.
Among FountainVest Partners' investments is a stake it acquired in November 2009 in internet portal Sina.com, which relies for its growth on China's citizens buying more computers and spending more time online. And this January, the fund purchased HK$400 million of shares in die casting machine supplier LK Technology Holdings, which supplies mainland makers of everything from cars to mobile phones.
Tang was born in Shanghai in 1968 during the decade-long Cultural Revolution. His parents had been engineers before the revolution started in 1966 and effectively shut down the mainland's industry. His first job after graduating from university in Shanghai was helping a Shenzhen textile factory set up a Hong Kong joint venture. Thanks to a loan from a wealthy Taiwanese uncle, Tang was able to go to Columbia Business School in New York in 1992. He joined Goldman Sachs in early 1994, among the first batch of Chinese recruits the US investment bank hired to begin capitalising on China's growth.
How do you choose Chinese companies to invest in?
We do a lot of reference checks. It's important to find out how exactly the entrepreneur first made his money. Where did that initial capital come from? And does he have a good circle of people around him? What is the opinion of local government officials who know him?