Wednesday, February 8, 2023

Hedge fund Elliott withdraws from Hong Kong

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US hedge fund Elliott Management is closing its Hong Kong office, becoming one of the first major financial institutions to end operations in the territory since entering a period of civil unrest and political tension in 2019 .

The activist fund, which was founded in 1977 by billionaire Paul Singer and launched dozens of campaigns around the world, has been in Hong Kong for 15 years. It will move Hong Kong-based staff to its London and Tokyo offices, which will become its only base in Asia.

A note sent to investors said: “In accordance with Elliott’s long-term planning processes, we will close trading and investing activities in the Hong Kong office and, effective January 1, 2021, transfer primary responsibility. existing Asian investments (ex-Japan). positions and for new situational exchanges and investments in Asia at the London office. “

Elliott’s biggest campaigns in Asia include a $ 2.5 billion investment in Japanese tech conglomerate SoftBank and an ongoing six-year battle with Bank of East Asia, controlled by the Hong Kong Li family. these will now be overseen by teams in London and Tokyo, according to a person close to the fund.

His departure comes six months after China imposed national security laws on Hong Kong, increasing its power over the territory in a move that has since been condemned by the United States and Europe.

The new Chinese regime in Hong Kong, which targets subversion of state power or “interference” from foreign countries, has raised concerns about Hong Kong’s future as a global financial center © Philip Fong / AFP / Getty

Other funds contacted by the Financial Times described plans to move individual staff or parts of their operations to other cities in Asia, citing concerns that the business environment in Hong Kong becomes more and more unpredictable.

However, a person close to Elliott said the decision to end operations in Hong Kong was first taken in early 2018 and was not driven by more recent political or legal changes in the region. The fund has downsized the territory from around 40 to fewer than 20 people over the past three years, the person said.

The new Chinese regime in Hong Kong, which targets the subversion of state power or “interference” from foreign countries, has raised concerns about Hong Kong’s future as a global financial center. This includes fears that the crackdown could lead to a flight of capital and talent to rival Asian business centers in Singapore and Tokyo.

Elliott’s decision to move staff from Hong Kong to Tokyo coincides with a continued boom in shareholder activism in Japan and the remarkable successes of several high profile campaigns. In recent months, activists have felt emboldened and tried new tactics: Toshiba was forced last week to take steps to organize a double extraordinary general meeting shareholders later this year after demands from two separate investors.

Then, in a landmark $ 1.2 billion deal sealed on Monday, real estate giant Mitsui Fudosan made a takeover bid for Tokyo Dome, operator of one of the world’s most popular sports venues. famous from Japan. The deal grew out of a campaign led by Hong Kong-based activist Oasis, which demanded a wholesale Tokyo Dome direction shake.

Elliott’s activism in Japan has meanwhile been relatively low-key, but it has involved high profile targets which include the Hitachi conglomerate and Unizo real estate developer. A year ago, Elliott built a significant position in SoftBank, which she used to pressure company founder Masayoshi Son to buy back shares and seek other strategies to increase the company’s valuation.

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