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The View | How Hong Kong’s family offices can use impact investing to help fight wealth inequality
- There is a growing trend of family investors seeking non-financial returns in their communities, supporting local entrepreneurs and giving back to society
- For family offices that are equipped with the right know-how, impact investing can promote the kind of social mobility that is increasingly rare in this city
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At a time when wealth inequality is recognised as one of the underlying causes of tension and despair in Hong Kong, the government is stepping up efforts to promote the city as a family office hub for ultra-high net worth individuals. InvestHK is setting up a dedicated global team to provide one-stop services for family offices, while the Securities and Futures Commission has issued guidelines that clarify licensing requirements.
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The family office ecosystem in Hong Kong does generate direct and indirect employment in investments, tax and legal services. Capturing business opportunities arising from the boom in family offices is also critical to maintaining Hong Kong as an international wealth management centre.
Aside from investment opportunities in the Greater Bay Area, Hong Kong’s traditional strengths, such as its simple, low-tax system, its role as China’s global financial centre, a robust legal system and the presence of world-class professional services, offer a compelling proposition. However, the government’s vision for Hong Kong as a family office hub should go beyond simply attracting mainland and overseas family offices to use the city as an investment platform. It is also important to encourage family offices, especially local ones, to engage in impact investing in Hong Kong.
There are Hong Kong-based family offices that have invested in meaningful local projects. For example, RS Group invested in Social Ventures Hong Kong, which in turn operates a venture philanthropy fund for high-impact social ventures. But the difficulty in finding attractive and sizeable deals in comparison to overseas markets means that some family offices do not have local investments in their portfolio.
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Apart from continued efforts to nurture home-grown start-ups to enrich the deal pipeline and strengthen investment offerings, there needs to be a greater awareness of the global trend of family investors seeking non-financial returns in their communities, as well as the importance of and avenues for lending support to Hong Kong-based entrepreneurs.
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Last month, Nintendo heir Banjo Yamauchi made headlines for launching the Yamauchi No. 10 Family Office, which aims to tackle social issues in Japan. According to Bloomberg, Yamauchi envisions his family office to be a “mind-blowing” venture that does things differently.
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