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Paris-based private equity (PE) firm Ardian has opened a 4,000 sq ft office in Hong Kong’s main business district, with an eye on growing its US$3 billion investment out of the company’s total US$200 billion in assets under management (AUM). The new office at the Two International Finance Centre in Central marked the company’s fifth location in Asia and would initially have eight permanent staff, according to Jason Yao, the group’s head of Greater China. “The reason we have an office here is to be close to our investors,” Yao said in an interview with the Post on Thursday. “We have very important insurance companies that have already committed to our various products. To be close to clients is one thing we want to develop in Hong Kong.” “Private wealth is also a big topic in our industry as a source of capital. Investment-wise it is very important for the secondary business,” Yao added. “So we have a lot of sellers here and we have most of the intermediaries, the investment bank side, also here. It’s also very critical for us to further expand our secondary business in the region.” Ardian, one of the largest European-headquartered PE firms, is considered one of the leading investors in the secondary private market, which involves the buying and selling of existing investments from other investors. It has about 50 long-standing clients in the Greater China region. Its investors include insurance firms, sovereign wealth funds, private wealth investors and endowments. The company’s expansion reflected robust growth in Hong Kong’s private banking and wealth management sectors, as well as an evolving office property market that is contending with slower demand amid plenty of new completed prime office buildings. Major private banks’ AUM in Hong Kong rose 14 per cent in the first half of the year compared with the end of December, while they hired more than 400 wealth management experts in the past two years, an increase of 12 per cent, according to Eddie Yue Wai-man, the Chief Executive of the Hong Kong Monetary Authority. Some of these banks also expanded their office space. Meanwhile, 17.1 per cent of the city’s prime offices were empty as of the third quarter, according to data compiled by consultancy CBRE. The number of empty offices is likely to hit a record 19 per cent by the end of the year. That development comes as the banking and finance sector further reduced its office footprint in Hong Kong by 70,000 sq ft of net floor area between 2022 and 2025, following a significant 680,000 sq ft contraction in the preceding three years, CBRE said. Firms from the US, Europe, Middle East and Africa reduced their total footprint by 1.3 million sq ft from 2022 to 2025, which was a smaller decline than the 2.7 million sq ft drop seen from 2019 to 2022, the consultancy added. On a positive development, the Hong Kong stock market has topped the global rankings for initial public offerings, as 66 companies raised US$23.27 billion on the main board in the first nine months of this year. In addition, the government has remained aggressive in attracting affluent investors in the city via its cash-for-residency scheme. Before the opening of Ardian’s new office in Central, Yao said the company would serve Hong Kong-based clients from its Beijing office. “It makes more sense to be based here instead of flying in and out of Hong Kong every week,” he said, adding that Ardian planned to hire seven new recruits by next year. It also helped that office rental prices in Hong Kong have fallen as the group committed to a long-term lease for its space in Central. “The rent is much better than we expected,” he said. “We’re very lucky as we signed last November and I consider that timing to probably be the bottom of the market.” There was a lot of potential for Ardian to grow investments from Hong Kong-based clients, even doubling them by next year, he said. Ardian considered establishing an office in Hong Kong even before the Covid-19 pandemic, but had to defer the plan owing to social distancing measures and the search for a suitable space. “Hong Kong’s Central is unparalleled,” he said. “Nowhere else can you find in such a small [central business] area, where you have all your peers, all the investment banks, all the lawyers, all very concentrated in one super efficient location.” “We also like the (Victoria Harbour) view.” As for some companies, either downsizing operations in Hong Kong or leaving the city, Yao said these cases typically made a lot of noise. Ardian, however, viewed them as a “natural transition”, he added. “You always have people coming and going,” he said. “As a European firm, we always watch out for opportunities in Hong Kong. We are committed and we want to be here in the next 20 to 30 years.”
