March 18, 2024
NF Trinity looks for diversified global investments in the private market, while trying to avoid bias towards certain countries or sectors.
Hong Kong business conglomerate Nan Fung Group’s family office, NF Trinity, values longstanding general partners (GPs) with a strong track record. Meanwhile, it also supports new managers with a promising future or for tactical allocations.
A GP might gain an edge if it has certain strategic advantages to offer, such as co-investment opportunities, according to Managing Director and Chief Investment Officer Helen Zhu.
The family office usually looks for global managers with a strong track record across different vintages.
“We tend to develop relationships that we can basically keep working with and support over vintages so that we know them well,” Zhu told AsianInvestor.
Governance is also an important factor. This includes whether a GP has an established and stable team with low turnover.
NF Trinity tries to have as few biases as possible when investing. Hence, it adopts an approach enabling comprehensive exposure across strategies and geographies, while maintaining a certain level of flexibility for specific market opportunities.
“We usually like more global, more general type of fund allocations,” Zhu said.
It does not prioritise managers with an office in Hong Kong, but rather adopts an unbiased approach in choosing the best GPs globally.
GLOBAL APPROACH
Nan Fung Group is a private conglomerate in Hong Kong founded by textile tycoon Chen Din Hwa. The business now spans property development, life sciences, shipping, and financial investments.
Its investment arm, NF Trinity, runs a global long-only multi-asset portfolio in the public markets, where it makes direct investments through its in-house investment team.
In the private market, the family office mainly allocates capital to GPs, while also selectively investing in direct or co-investments opportunities globally.
Its fund investment portfolio covers private equity, venture capital, private credit, real estate, infrastructure, and secondaries.
For the direct or co-investment alternative positions, NF Trinity usually invests together with other top-tier GPs. It also has internal sourcing capabilities to access deals.
NEWCOMERS WELCOMED
Certain partnerships formed over two decades of consistent investments have turned into favored relationships for the family office, as it has backed several funds managed by these GPs.
“But from time to time, we’ll also support and invest into new managers, either up-and-coming ones that we think are really promising, or for tactical allocations to things that we think at this part of the cycle will make a lot of sense,” Zhu said.
For example, NF Trinity started to look at secondary opportunities last year from some distressed sellers, through both secondary funds and direct investments.
“The discounts could be anywhere between 20% to maybe even 50% of the last mark, which I think is quite interesting. This kind of opportunity isn’t always there throughout the entire cycle. So that’s why we think probably for this vintage, it could be something interesting to look at,” she said.
Another example would be private credit, which the family office hadn’t invested in for some years, amid a low interest rate environment.
It began looking for opportunities in private credit and distressed credit positions — mostly in the developed markets — since 2023, as interest rates soared in developed markets and capital supply became scarce.
The family office doesn’t have a specific bias on certain types of private credit.
“If we pick the right manager in a particular asset class that’s tried and tested and has a global scope, then we’ll leave it to the managers to gauge what they think makes sense,” Zhu said.
“But we would usually aim for a diversified exposure rather than anything too niche,” she stressed.
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