The investment platform will help small businesses and one-man enterprises in China with all their funding needs.
In a bid to empower China’s small businesses and entrepreneurs, the former Chief Executive of Hong Kong Exchanges and Clearing Limited (HKEX), Charles Li Xiaojia, and the Chief Executive Officer of the Hong Kong-listed Oriental Patron Financial Group, Gary Zhang, have launched a new investment platform – Micro Connect. The investment platform – a part of the Numa group – aims to provide 10,000 small businesses in China with the necessary funds in its first year. As per reports, the company may need to raise US$1.5 billion to achieve this goal.
Putting the spotlight on the growth potential of China’s businesses, Li hopes to support the micro economy of the country. He wants to connect global capital with quality businesses. In doing so, he is enabling international companies to invest in the world’s second-largest economy. In a press conference, Li declared that a significant portion of the investments will go towards the service and retail sectors. His goals are to diversify the company’s portfolio and provide extensive exposure to all industries.
On the company’s business model, he noted, “We’re not consuming funding from the public source. We are not creating a systematic risk to China’s financial system. We are spending on places where real financing should have been.” Explaining how the platform will work, he said that the team will start by identifying successful key companies by industry. Then, it will make collective investments in several small and micro enterprises associated with the key businesses. “Such [enterprises] include internet platform companies, headquarters of various franchise companies, and software-as-service providers that collect large amounts of information on small and micro-businesses,” he added. Micro Connect plans on making various small investments across a diversified portfolio. With that, the company will achieve an overall investment return.
In another interview, he shared that the company had already raised enough money to test drive the digital networks that will connect the small businesses with investors. He said, “As soon as those [networks] are ready, we will bring funding into those industries.”
The launch of Micro Connect comes amid China’s crackdown on tech giants in the country. The recent bans have wiped off US$1 trillion from the country’s economy. Li is not worried. In an interview, he justified his confidence by asserting that he is “on the right side of history.” On whether the crackdown will influence his decision while choosing industries to invest in, he said, “Our funding source has the least ability to absorb risk.” He feels that, individually, the companies might pose high risk, but collectively, they will be profitable and pose low risk. “We are looking at a portfolio that has a lot of upside, some downside, and, hopefully, the aggregate of the portfolio works [in our benefit].”
In the next five years, Li expects Micro Connect to support over 100,000 businesses in China.
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