Hong Kong Financial Development Council: Proposed establishment of an exclusive licensing system for private equity, venture capital and private equity credit

The Zhitong Finance App learned that on June 10, the Hong Kong Financial Development Council released a research report entitled “Helping Startups Succeed: Attracting and Deepening Local Alternative Investment Funds”, which aims to further strengthen Hong Kong's position as a leading global asset and wealth management center. The report highlights the importance of alternative investment funds in start-ups, pointing out their key role in diversifying risk and helping early-stage enterprises scale and drive the transformation of mature industries. The report puts forward six suggestions, including formulating a strategic and forward-looking policy vision; establishing an exclusive licensing system for private equity, venture capital and private equity credit; optimizing public funds to promote the development of private equity, venture capital and private equity credit; and incorporating specific alternative investment options into MPF schemes.

Against the backdrop of increasingly fierce competition for global capital and innovation, Hong Kong's financial ecosystem is at a critical moment, and alternative investment funds (such as private equity, venture capital, private equity credit) are playing an increasingly important role in constructing its startup landscape. This alternative investment tool has been widely used by family offices and ultra-high net worth individuals, proving that it is a practical wealth management tool for risk diversification. These strategies not only fill the funding gap, but also help early-stage enterprises expand their scale and promote the transformation of mature industries through the deployment of patient and risk-tolerant capital, and promote long-term economic growth and transformation.

Mr. Hong Pi-ching, Chairman of the Hong Kong Financial Services Council, said, “Hong Kong has unique advantages and has the potential to transform its financial ecosystem into a development platform for a new generation of start-ups, connecting global capital with regional innovation. By deepening the alternative investment market and further strengthening its strategic role in asset and wealth management systems, Hong Kong is expected to catalyze a more dynamic and sustainable expansion of an innovative economy to provide impactful solutions to global challenges.” He added, “The policy recommendations put forward in this report aim to plan a forward-looking development path, coordinate incentives, promote inter-agency collaboration, and guide private capital investment to unleash the full potential of alternative investment and innovation interaction. By strengthening public-private cooperation and breaking through bottlenecks, we will lay the foundation for more inclusive economic growth and long-term social value. ”

The report reflects the professional opinions of the Hong Kong Financial Services Council's dedicated industry working group and puts forward specific suggestions for promoting the integration of alternative investment and innovation. These recommendations include: (1) formulating a strategic and forward-looking policy vision to promote Hong Kong as a global alternative investment fund hub; (2) establishing an exclusive licensing system for private equity, venture capital and private equity credit; (3) modernizing the tax and regulatory framework to support alternative investment development; (4) optimizing public funds to drive the development of private equity, venture capital and private equity credit; (5) accelerating innovation and growth through innovative financing models and technology transfer; and (6) incorporating specific alternative investment options into MPF schemes to diversify investment portfolios.