Caixin
Aug 04, 2021 03:35 AM
FINANCE

Charles Li’s Next Act: Investing in Small Businesses

Former Hong Kong stock exchange CEO Charles Li (left) and Zhang Gaobo (right) announcing the launch of Micro Connect. Photo by Wei Yiyang/Caixin
Former Hong Kong stock exchange CEO Charles Li (left) and Zhang Gaobo (right) announcing the launch of Micro Connect. Photo by Wei Yiyang/Caixin

Charles Li, the former chief executive of Hong Kong Exchanges and Clearing Ltd., launched an investment platform to connect global capital with small businesses on the Chinese mainland, Li said Tuesday.

The platform, Micro Connect, will focus on the domestic demand sector in China, according to Zhang Gaobo, CEO of private equity firm Oriental Patron Financial Group Ltd. and Li’s partner in the project. The vast majority of investments will be related to the service and retail sector, Li said at a press conference.

The platform is part of Numa Group co-founded by Li and Zhang. Numa is also building a new digital exchange platform, NumaEx, and a social media service platform for small business owners and entrepreneurs.

The platform’s Chinese name translates literally as “drip irrigation connect,” a name inspired by agricultural irrigation directing water to crops, Li said. The idea of Micro Connect is to link international capital with small and micro enterprises, which have difficulty accessing investment and financing.

The platform will make many small investments in a portfolio with highly diversified risks to achieve an overall investment return, Li said. Initially the platform will identify successful key companies by industry and make collective investments in a large number of small and micro enterprises associated with the key businesses, Li said.

Such key companies include internet platform companies, headquarters of various franchise companies and software as a service providers that collect large amounts of information on small and micro businesses, Li said.

Micro Connect aims to start with dozens of industries and invest a small amount of capital in the first year. After gaining experience, it will invest larger amounts, Zhang said. Numa Group aims to cover China’s 100,000 small and micro businesses in the next three to five years, Li said.

Li stepped down from the Hong Kong exchange at the end of 2020 after leading the Asian stock market for more than a decade as the longest-serving head of the company since it went public in 2000.

During Li’s tenure, the exchange started stock and bond connect programs that allowed investors in Hong Kong and on the Chinese mainland to trade on each other’s bourses. It also implemented a dual-class share IPO system that allows traded companies to have different types of shares that correspond with different voting rights and attracted money-losing biotech companies to sell stock.

Zhang founded Oriental Patron in 1993. Before that, while working in Hainan provincial government and the central bank’s Hainan branch, he helped found the Hainan Stock Exchange Center. He is experienced in China’s financial markets, Chinese companies’ offshore listings and cross-border asset management.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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