By leveraging its billionaire backing and a principal-led model that rejects traditional transaction fees, Hong Kong’s Sun Hung Kai & Co. is targeting ultra high net worth families that want institutional-grade alternative co-investments but lack the internal headcount to source them alone.

The Hong Kong-listed firm managed HK$24.6 billion (~US$3.2 billion) in 2025, with its principal capital drawn from its own balance sheet. The family of group executive chairman Lee Seng Huang, a billionaire, holds a dominant 70% stake, while the remaining shares are publicly traded.

Within its alternative solutions business, the firm’s external capital primarily comes from sophisticated family offices with net worths generally ranging from US$500 million to US$1 billion.

“They often operate with small, lean teams of only one or two people. By partnering with the firm, they gain the ability to leverage our 30-strong investment team and access our proven track record,” said Tony Edwards, deputy CEO at Sun Hung Kai & Co.

He added that the investment model aims to create a stronger alignment of interest between the firm and its partners. “Unlike banks and other intermediaries – they get paid on transactions – we get paid on making good investments, as a principal-led investment platform. It’s about partnering well, with both LPs and GPs, and doing good deals with the right risk returns,” he told Asian Private Banker in a recent interview.

Partnership model

Instead of aggressively expanding internal headcount, Edwards said that the firm utilises a decentralised model — partnering with overseas and local managers to provide growth capital in exchange for privileged access to their risk-return profiles.

Early this month, the firm entered into a partnership with Janus Henderson to collaborate across alternative investment solutions through new product formation and strategic capital raising focused on the Asia Pacific market.

These relationships also frequently lead to co-investment opportunities. A prime example is the firm’s partnership with Mubadala Capital, where it gained access to the same co-investment flow as the Abu Dhabi government, Edwards shared.

“We are very happy to lead all our deals in terms of being the majority investor or doing the underwriting, or co-underwriting. Some of the bigger family offices will work together to understand the risk-return opportunity and invest together in those opportunities.

“We can then negotiate and structure the deal in such a way that we get privileged return access […] you won’t get this from traditional distribution channels […] We’re looking to share and grow our external capital to allow us to leverage that combined capital to access better opportunities,” he said.

Rising demand for hedge funds

Trends such as the intergenerational wealth transfer in Asia and heightened volatility are driving growing demand for hedge funds that deliver consistent compounding and uncorrelated returns, providing a necessary buffer against market uncertainty, according to Edwards.

“I think hedge funds, in particular for the next 10 years, could be where you want to be, because it’s all about applying a much more sophisticated risk framework to public market investments to enable you to capture that alpha,” he said.

While many of the larger multi-strategy funds demand three-to-five-year lockups and have seen poor or even negative performance this year, the firm has taken a different path. By prioritising monthly and quarterly liquidity, it has built a portfolio that has successfully protected capital and delivered positive year-to-date returns, according to Edwards.

“In the hedge fund space at the moment, we have a very strong bias towards liquidity. We think the market undervalues liquidity significantly, and you do not have to pay a lot for liquidity to access good risk-return,” he said.

Manager selection 

Many large hedge fund managers utilise pass-through fee structures that can be opaque and prohibitively expensive. By identifying managers without these fee burdens, Edwards said the firm can deliver significantly higher net returns.

“If you try to avoid those with very large fees and if you’re focused on liquidity, there are some managers that are not that big. It’s easier for them to apply their investment philosophy in the market and be quite nimble around the risks. I think there’s a lot of opportunity there,” he said.

The success, however, relies on the ability to distinguish true talent from the rest of the field.

“I think a lot of other intermediaries are happy to sell brands because it’s easy to sell, rather than do the hard investment work, and invest in managers that have a lot of career risk associated with them […] We don’t tend to follow the herd,” Edwards said.

When investing in large-cap hedge funds based strictly on performance and merit, the firm leverages its sector expertise to make high-conviction decisions quickly, securing early allocations before they close to the broader market, according to Edwards.

Bullish on middle markets

The firm also maintains a bullish outlook for private credit with a specific focus on the middle market. 

Unlike strategies that lend based on EBITDA projections, which have faced significant headwinds in the US recently, Edwards said the firm is conservative with underwriting terms, preferring investments backed by hard assets.

Regarding evergreen vehicles, he emphasised that success hinges on the stringent matching of asset and liability profiles to ensure long-term stability.

“If a hedge fund has underlying assets which are more liquid, then it may offer monthly or quarterly liquidity. In private equity and in real estate or other private markets, we invest on a deal-by-deal basis.

“For those we mark the structures around a closed-end solution, the deal would usually be between three to seven to 10 years, depending on its nature. And once you’ve made your investment, you wait for the liquidity event. I don’t think there’s any way around that,” Edwards told APB.