Hong Kong Tycoon-Backed Firm Is Raising $500 Million to Invest in Crypto, PE

Cathy Chan, Bloomberg News

Adrian Cheng, chief executive officer of New World Development Co., at the State Theater in Hong Kong, China, on Wednesday, April 7, 2021. New World, one of Hong Kong's biggest real estate companies, is accelerating its expansion into areas such as health care and insurance as it targets more business in mainland China. , Bloomberg

(Bloomberg) -- C Capital, a firm started by Hong Kong real estate tycoon Adrian Cheng, plans to raise $500 million to invest in blockchain assets, credit and private-equity over the next 18 months, betting prices of private companies and digital assets are bottoming out.

Also co-founded by ex-Bank of America Merrill Lynch banker Ben Cheng, the firm is marketing a $200 million blockchain fund and plans to gather about $300 million to invest in private-equity and private credit strategies next year, people familiar with the matter said, asking not to be identified discussing fundraising details.

“When people are on defense, we’re on the offense,” Ben Cheng, the firm’s chief executive officer and president, said in an interview. This type of environment historically “will yield the best result. After another 6 to 9 months, it will come back.”

The fresh funds will add to the about $1 billion C Capital has invested in private companies, digital assets and credits. Its hedge fund strategy mainly focuses on crypto trading, and it has turned down approaches from angel funds or firms at a seed stage because they have high valuations and limited upsides, according to Cheng.

Started as a venture capital investor, the five-year-old firm has in recent years expanded to later-stage companies, investing in more than 60 businesses including protective phone case company CASETiFY and blockchain gaming company Animoca Brands.

The blockchain fundraising comes amid a steep drop in crypto prices that began in late 2021. Even so, Cheng said that the value of its existing crypto investments swelled by 40% in the first half, after doubling last year.

Private equity and credit strategies take up about 40% of its capital, with the remaining 20% deployed in the hedge fund asset class, said Cheng. Its credit fund provides senior and mezzanine loans of up to 70% of asset values to families, funds and corporates backed by residential and commercial collateral. More than half of the assets are located in Hong Kong, he said.

The prolonged turbulence in China’s property sector has had a limited impact on the firm since it only focuses on landmark properties in prime locations, according to Cheng. It’s also looking at more credit opportunities in Australian residential and commercial real estate, he said.

C Capital has 25 employees, 10 of whom are focused on private-equity and 10 on credit and hedge funds. The firm currently has four offices and is expanding globally, Cheng said.

Adrian Cheng, the grandson of tycoon Cheng Yu-tung, is chief executive officer of New World Development Co. and heir to the Chow Tai Fook family fortune. The developer’s holdings include Hong Kong luxury mall K11, which combines high-end retailers, restaurants and art installations.