“At a young age, she is already an old hand, and a good one at that,” U.S. venture capital veteran Robert Grady told Private Equity Analyst when describing his former Carlyle Group protégé Elaine Wong, now a founder and partner at HAO Capital in China.
Indeed, at only 36, Ms. Wong’s Beijing-based firm is already gearing up for a third fund that could total around $500 million, while she sits on the boards of Chinese companies, including home furnishings company Ju Tai Long.
Originally a scientist, with a chemical engineering degree from the Massachusetts Institute of Technology, Ms. Wong decided to embark on a career in investment after realizing laboratory work wasn’t her forte, encouraged by a friend who worked at Carlyle.
In 1999, she accepted a job at Carlyle in the U.S., admitting that at that time she knew little about the industry. She found her feet quickly: One early deal saw her involved in multiple investments in Blackboard Inc., a developer of e-learning software for universities, for Carlyle Venture Partners. In 2011, Blackboard, which had since listed on Nasdaq, was bought out by Providence Equity Partners for $1.64 billion. “Elaine had the background and intellectual capacity to understand the technology,” said Mr. Grady.
In 2001, Ms. Wong decided to pursue an M.B.A from Stanford University that would help hone her “softer” skills, she said. One particular class that has proved useful to this day, she explained, was interpersonal dynamics, also known as “touchy feely,” which has come in useful when working with entrepreneurs.
On graduating, she returned to Carlyle, but this time for its Asia operations. “The early 2000s were a good time for Western VCs in China – the government was welcoming of the know-how, the investing expertise and the technology domain knowledge being used to assist China’s growth,” said Mr. Grady. It did, however, take more leg work when it came to deal sourcing as the market was immature, said Ms. Wong.
After several years with Carlyle, which saw the firm invest in Chinese companies such as C-Trip, an online travel agency that now trades publicly, Ms. Wong decided to set up on her own firm, founding HAO Capital in 2006.
She said that persuading some limited partners to back a China-only fund was a challenge, as many preferred to hedge their investments via a pan-Asian vehicle. In 2006, “people were intrigued by China, but not everyone was ready to pull that trigger” and invest in a solely China-focused vehicle, said Ms. Wong. Fast forward six years, and the firm now manages around $500 million across two funds, according to HAO Capital’s website. Ms. Wong said the firm targets a five-times return on its investments.
HAO invests in consumer, health care and light industrial companies, typically targeting a 10% to 25% shareholding, with deal size ranging from 80 million yuan ($13 million) to 300 million yuan. It has established alliances with other China-based businesses such as home-grown private equity firm Harlyn Capital. In July of last year, Hao teamed up with Guangdong-based consumer electronics company TCL Corp. to form a joint venture that will invest in Chinese diagnostic imaging companies.
HAO’s portfolio includes LP Amina, which provides environmental and energy technology services for electric utility plants, and mobile payment platform company HiSunPay. It has seen exits from the likes of China Cord Blood Corp, a health-care company that listed on the New York Stock Exchange in 2009, and waste management business ZhongDe Waste Technology AG, which went public on the Frankfurt exchange in 2007.
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