End of an era? Investors exiting from hedge funds

Value Partners Investors Raise $374 Million in IPO (Update1)

By Bei Hu

Nov. 14 (Bloomberg) -- Value Partners Group Ltd. priced the first Hong Kong initial public offering of an asset manager at the top end of a range, allowing two investors to raise HK$2.9 billion ($374 million), two people familiar with the sale said.

The Hong Kong-based company, ranked by Alpha magazine as Asia's second-biggest hedge fund manager by the amount of assets it oversees, priced the 381.6 million IPO shares on sale at HK$7.63 apiece, said the people, who declined to be identified before an official statement.

The IPO consists entirely of existing stock on sale from JH Whitney III LP and Value Holdings LLC, two U.S. private equity investors that bought shares of Value Partners before the public offering. The sale of a 23.9 percent stake in the company gives the manager of retail, hedge and buyout funds a market value of $1.6 billion.

Ping An Insurance Group (Group) Co., China's second-largest insurer, paid HK$1.1 billion for a 9 percent stake in the asset manager, according to Bloomberg calculations based on information provided in a share sale document. Value Partners managed $5.7 billion of assets at the end of June, according to the document.

Strong Demand

Investors are buying into a company which expanded assets under management 10-fold in the 14 years since its inception under the leadership of Chairman and Chief Investment Officer Cheah Cheng Hye.

Value Partners has benefited from the growing demand for asset management services as a result of aging populations, growing wealth and stock booms in Hong Kong and China. The fund manager specializes in picking small- to medium-sized companies.

``They have built a nice company which is very profitable at the moment,'' said Sebastiaan de Bont, who manages $2 billion at Fideuram Asset Management in Dublin, which didn't buy the stock yesterday before the pricing. He voiced concern whether Value Partners could repeat its growth last year in a market downturn, because of its reliance on performance fees charged on excess returns.

JPMorgan Chase & Co. and Morgan Stanley arranged the sale.

Teresa Yu, a Hong Kong-based spokeswoman for Value Partners, Marie Cheung, a JPMorgan spokeswoman in Hong Kong, and Nick Footitt, a spokesman for Morgan Stanley in Hong Kong, declined to comment.