New World scion’s family office plans equity hedge fund to capture improving market sentiment

Avantua family office plans to launch its first hedge fund as early as this quarter to bet on price swings in Hong Kong, mainland stock markets

Firm seeks US$50 million to kick off the fund with own money and from outside investors

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Investors are streaming back into Chinese stocks after recent signs of economic recovery. Photo: EPA-EFE

Published: 9:30am, 4 Jul 2022

Avantua Group, the family office created by scion of Hong Kong’s third-richest family, is preparing to launch its first hedge fund as soon as this quarter as better sentiment in the city and mainland China’s stock markets is winning back global investors.

The firm, founded in 2019 by Adrian Cheng Chi-kong of New World Development, is seeking to raise US$50 million in the new venture, with about one-fifth its own money and the rest from outside investors, according to managing director Xu Hao. It aims to complete the fundraising by September and start investing using a long-short strategy, he added.

The firm currently manages US$2 billion of assets, focusing its equity investment in private companies in its first two years of operations. A rout that erased US$2.5 trillion of capitalisation over the past 12 months from members of the MSCI China Index has now made equity valuations appealing again.

“When we first started, the market was red-hot and everyone was on a buying binge and many of them just put in money with their eyes closed,” Xu said in an interview. “We did not jump in as we felt such a craze could be dangerous and get us burned. Now, the market has cooled down. We believe it is time to [make a] move.”

Xu Hao, managing director, Avantua Group. Photo: Handout

Cheng is the third generation scion and eldest grandson of the late Cheng Yu-tung who founded Hong Kong developer New World Development. The Cheng family was credited with more than US$26 billion in net-worth by Forbes in February. He is the chairman of Avantua.