Jamie Paton of 3i finds Hong Kong the perfect platform for China

When Jamie Paton moved to Hong Kong last year to set up a new north Asia office for 3i, the London-based venture capital fund, he expected that, when he wasn't seeking investment opportunities, he would be helping companies in which 3i has a stake to take advantage of what the region has to offer.

That has proved true. "Hong Kong is a wonderful bridge for China," said Mr Paton, who as north Asia director for 3i Asia-Pacific, has a remit which also includes Hong Kong, China, Taiwan and Korea. "Many 3i companies have relationships in China, through sourcing and manufacturing. We are being approached by a growing number of 3i companies in the US, Europe and even Hong Kong seeking access to supply chain management businesses, joint venture partners or simple manufacturing businesses to outsource production."

What surprised Mr Paton was how much activity also involved north Asian companies interested in tapping into 3i's international portfolio. "Our role is also to help 3i companies wherever they may be located. In Hong Kong, we act as a natural bridge into North Asia. I have been interested to see how many inquiries over the last 18 months have gone the other way.

"People are approaching us here to see if we can find opportunities in our portfolio elsewhere, such as in Europe and the US. These are businesses based in Hong Kong, China, Taiwan and Korea. We are only a year old in Hong Kong, but this is becoming an exciting part of our role."

In 3i's case, there are many companies for Asian entrepreneurs to consider. As one of Europe's leading venture capital funds, founded in 1945, publicly listed and with a place on the FTSE, it has over 2,500 investments worldwide and a combined value of some HK$75 billion (US$9.64 billion), including co-invested funds. Hong Kong was the natural choice for a new office to complement 3i's existing offices in Tokyo and Singapore.

A major hub for north Asia

"Hong Kong is undoubtedly the major hub for business in north Asia," said Mr Paton. "It has a fantastic array of the softer elements of our business - investment banks, accountants, lawyers and consultants all providing advice and a platform for our companies.

"Its legal system and tax environment are very effective for business. It is also efficient. That's why many venture capital funds have regional headquarters here. We saw this as our first stop in north Asia."

3i's first investment was with a mutliplex cinema chain in Korea and Mr Paton is hoping another couple of good deals will come to fruition over the next six months. But he is in no hurry, which also explains why 3i was prepared to expand into north Asia during tough economic times.

"We are building for the next 20 to 30 years. The timing is irrelevant. We need a strong platform, good relationships, good partners and a commitment to the region."

Mr Paton, like many of his contemporaries from major fund companies which use Hong Kong as a regional base, is active in the Hong Kong Venture Capital Fund Association. It was set up in 1987 to promote interest in private equity and venture capital and currently has 133 members, running high quality seminars and functions throughout the year.

He has found help from the British Chamber of Commerce invaluable as well. "In Hong Kong, the British Chamber has provided support and guidance for both our business here and for 3i portfolio companies looking to operate in North Asia, from Hong Kong. This has included advice on our operation itself and introductions to many different organisations and individuals - the business of private equity and venture capital is based around strong relationships, so this has been invaluable. For our portfolio, the same is true and as more links are made in Hong Kong as an access point for the growing market in China, the Chamber's role will continue to be essential."

For Mr Paton, moving to Hong Kong with his wife and three children has been a positive experience. His children have settled into an English Schools Foundation school and the family enjoys the security Hong Kong offers, as well as its multicultural environment.

"Since I arrived, China has joined the WTO, Korea has continued its emergence, there have been developments between Taiwan and China and there was the World Cup in Korea and Japan. If you are not excited by all that you shouldn't be on this planet."

Related links:
3i www.3i.com
British Chamber of Commerce www.britcham.com
English Schools Foundation www.esf.edu.hk