H&Q Asia Pacific is actively investing six funds

More than half of its funds' committed capital is dry powder, managing director of the pan-Asia firm Mark Hsu tells Private Equity International.

H&Q Asia Pacific (H&QAP) is actively investing two renminbi funds, three Taiwan funds and a $550 million offshore fund, managing director of H&Q Asia Pacific, Mark Hsu told Private Equity International.

“All funds are in active deployment mode with generally more than half of the capital as dry powder,” Hsu said.

One of the renminbi funds is a joint venture fund with China's Everbright Bank.

H&QAP is also looking to launch new funds, Hsu said, without giving further details.

H&QAP invests principally in technology, retail, media and healthcare and it has also completed a number of cross border deals in China, where the economic slowdown has not affected business, he said.

“Deal flow is just as strong as before and there are more consolidation and M&A opportunities now. Capital flows are still very strong,” Hsu said.

H&QAP prefers to take majority stakes in the companies in which it invests.

“Where we take a minority, we almost always take a board seat and negotiate corporate governance rights,” said Robert Shen, managing director of H&Q Asia Pacific in Shanghai.

Recently, the firm exited its remaining 3.1 million shares of Fabrinet, a Thailand-based technology manufacturing company focused on optical components that is listed on the New York Stock Exchange. H&QAP invested $18 million for a more than 20x return, Hsu said.

Other recent deals include acquiring a stake in PhiSkin, a medical aesthetic chain based in Shanghai, and a $90 million investment in a pharmaceutical company in Korea. H&QAP has also invested in Viscovery, a mobile commerce software provider based in Taiwan.

H&QAP also invests in real estate and “will explore other real estate projects within the context of our GIC project,” said Hsu.

The Global Innovation Center (GIC) is a technology park near San Francisco airport in which HQAP has invested $100 million. H&QAP launched a specific fund for the investment open to investors from around the world, Shen said. The firm expects that associated projects will create further investment opportunities.

H&QAP is in discussions with technology companies regarding taking up tenancy in GIC, and with government agencies and technology parks to be strategic partners, Shen added.

H&QAP has raised about $800 million in total across its various funds, including venture capital, private equity and the new GIC fund, he said.

H&QAP was founded in 1986, and played a significant role in developing various technology parks in Asia, including Taiwan’s Hsinchu Park and a large commercial complex in the Shenzhen Science Park.

Since its inception, it has invested in more than 700 companies through 26 funds with a total AUM of $3.5 billion.