Hong Kong, renowned as a global financial hub, has witnessed the rise of a remarkable new hedge fund with a laser focus on China. Led by a former Hillhouse Capital Management fund manager, this nascent fund has managed to secure an impressive sum ranging from $100 million to $150 million. The fund’s robust fundraising achievement makes it one of the standout performers among China-focused funds this year.
Protium Capital Ltd, headquartered in Hong Kong, is poised to commence trading in July as a long-short equity fund. Its noteworthy success emerges during a time when numerous funds have been reducing their exposure to the world’s second-largest economy. Concerns surrounding trade disputes, political tensions with the United States, and a post-pandemic recovery that falls short of expectations have been the prevailing catalysts behind this trend.
Protium’s founder, Lu Ning, highlighted the truism that opportunities often arise amidst prevailing risk aversion. He firmly believes that China still harbors a wealth of high-quality companies and visionary entrepreneurs from a long-term perspective.
The fund’s seed capital was provided by billionaire Zhang Lei, the mastermind behind Hillhouse, a prominent alternative investment firm in Asia. Additional investors encompass a diverse range of entities, including business owners, financial institutions, and family offices hailing from China and across Asia.
Protium Capital’s investment focus will be directed towards the dynamic realms of technology, industrial enterprises, and the consumer sector.
Insiders within the industry contend that fundraising has proven to be an arduous task for China-focused funds this year. Most funds have struggled to amass $50 million or less, representing a notable decline compared to the previous year when the average funds raised ranged between $50 million and $100 million.
According to data from Eurekahedge, Greater China-focused hedge funds faced an average loss of 2.2% during the initial five months of 2023. In contrast, broader Asian funds demonstrated stagnant returns over the same period.
Lu Ning departed from Hillhouse in April, following a successful tenure. Prior to his role at Hillhouse, he served as the head of equities at China International Capital Corp until 2020.
As Protium advances towards its trading debut, the fund is diligently selecting prime brokers and engaging in discussions with esteemed financial institutions such as Morgan Stanley (NYSE:MS), UBS, and BofA Securities.
In 2022, newly launched China-focused hedge funds, excluding onshore yuan-denominated funds, collectively raised $1.7 billion. However, this figure represents a decline of 26% compared to the previous year, as reported by With Intelligence.