Empowering High-Tech Investments in China: Broad General Holding Files for Hong Kong IPO

Empowering High-Tech Investments in China: Broad General Holding Files for Hong Kong IPO

[Hong Kong, 3 July 2023] – Broad General Holding Limited, a private investment fund manager focusing on high-tech industries, announces that it has formally submitted its application form (Form A1) for listing and trading on the Main Board of the Hong Kong Stock Exchange on 30 June 2023. Broad General is a leading investment institution focused on empowering high-tech companies in China, a prime investing arena with strong policy support and a wealth of investment opportunities in recent years.

According to Frost & Sullivan, in terms of AUM, Broad General was the largest private investment fund manager in China serving domestic high-net-worth individuals and is focused on investing in high-tech industries as of 31 December 2022. As of 31 December 2022, the funds under management achieved a strong overall internal rate of return (“IRR”) of 18.7%, which outperformed the industry-average. This has earned the company a strong base of loyal investors. During the Track Record Period, the number of investors in Broad General grew strongly with a CAGR of approximately 12.5%. For the years ended 31 December 2020, 2021 and 2022, repeated investments by clients accounted for 43.6%, 48.1% and 69.2% of funding in each year respectively. With the rapid growth in fund size and the high number of loyal investors attracted, Broad General has seen a steady rise in revenue, resulting in total revenue including fund management fees of RMB122 million, RMB215 million and RMB212 million for the years ended 31 December 2020, 2021 and 2022 respectively, driving a total of RMB270 million, RMB730 million and RMB740 million in adjusted net profit respectively. The growth momentum in the last two years had been exceptionally spectacular.

Broad General has drawn significant market attention with its outstanding results and financial performance. Head of Research of Doo Financial HK, Sam Chi Yung, commented that as an industry-leading player, Broad General has a sharp investment vision, and the potential valuation of its investments has significant upside. As of 31 December 2022, the company had placed early or growth stage and late stage investments in 105 companies. 25 of its portfolio companies had at least doubled their valuation from the initial investment as of 31 December 2022, 14 of which had even quadrupled in valuation. The diverse exit routes available in Broad General have also sparked interest. In terms of the most common IPO exit approach, companies that have gone public in Hong Kong following Broad General’s investment include the “top chronic condition management company” ClouDr (09955.HK); Infinities Technology (01961.HK), the first gaming related company listed on the Main Board of the Hong Kong Stock Exchange since the pandemic; and XGIMI Technology (688696.SH), a leading player in the Chinese projection market, according to public information. In addition, the company has adopted other exit strategies to help companies grow further while maximising returns and achieving mutual growth. In 2019, Broad General placed a Series B round investment in a PRC-based corporate expense management platform, Fenbeitong, and partially exited in 2022 by means of share repurchase with a MOIC of approximately 5 times. Public information reveals that Fenbeitong achieved 3 times of revenue growth in each year between 2019 and 2022.

The development of high-tech industries towards a strong technological self-reliance has played an important part in China’s national strategy, serving as a significant driver for further innovation and economic growth in China. In terms of revenue, the market size of high-tech industries in China has grown from RMB35 trillion in 2017 to RMB63.4 trillion in 2021, representing a CAGR of 16% between 2017 and 2021. With the policy support, the high-tech industries have seen an increasing abundance of technology enterprises at different stages of growth and with diverse needs. As such, there have been tremendous investment opportunities, and the private equity industry that focuses on high-tech industries has been thriving.

Sam expressed his optimism for the future of the industry and said that private equity (PE)/venture capital (VC) investments as represented by Broad General will be a key driver of innovation and growth for Chinese enterprises. Over the past 10 years, PE/VC investments have successfully driven the development of Chinese companies in areas such as financial technology, e-commerce, logistics and the Internet, as well as the advancement of key core technologies and the global presence of Chinese manufacturing. Looking ahead, the size of the equity market in China focusing on high-tech industries is expected to further increase, driven by favourable policies, the accelerated digitisation of domestic SMEs and the ongoing technology deployment in high and new technology industries. As such, he said, it is timely and a notable move for the industry leader Broad General to submit an application for listing.