This article first appeared in The Edge Malaysia Weekly on October 15, 2018 - October 21, 2018

IT has been 44 years since Datuk Seri Cheah Cheng Hye sailed from Penang to Hong Kong on a cargo ship — the cheapest way to travel — hoping to eke out a living in the former British colony. When the 20-year-old Cheah reached Hong Kong in 1974, he had to take a walla-walla — a small motorised water taxi — to get off at Yau Ma Tei.

His initial plan was to work for just a few years and earn enough to return home with a tidy sum. Little did he know he would make his mark as a professional investor and rise to the pinnacle of the city’s investment fraternity.

Cheah is founding chairman and co-chief investment officer of Hong Kong-listed Value Partners Group Ltd, one of the largest independent asset management firms in Asia, with assets under management (AUM) of US$16.6 billion as at Aug 31. Value Partners had a market capitalisation of HK$10.34 billion as at last Thursday.

However, a crucial chapter in any classic immigrant story is the protagonist’s homecoming.

Now, after more than four decades, Cheah has returned to set up a new office in Kuala Lumpur, part of Value Partner’s plans to expand its global footprint.

“Obviously, on a personal level, there is this emotional and sentimental element to come back to the land of my birth to set up an asset management firm. It is something that fills me with much pride and the motivation to do a good job. I feel good about coming back here,” he tells The Edge recently in an exclusive interview.

Value Partners Asset Management Malaysia Sdn Bhd, the group’s Malaysia subsidiary, has received Securities Commission Malaysia’s approval in principle for a Capital Market Services Licence for fund management.

After obtaining the licence, its Kuala Lumpur office will serve as a hub in Southeast Asia for product development, investment and distribution.

Cheah, however, stresses that as Value Partners is a listed company, he would not let his personal feelings colour the firm’s big picture plans.

“I am not sure how to put this … but I don’t wish to emphasise the personal element too much. Yes, I own a 25% stake in Value Partners, but the remaining 75% is owned by other investors. At the end of the day, we want our Malaysian business to be profitable. It is not just about me coming back home.”

Since it was set up 25 years ago, Value Partners has been a value investor in Asia and around the world. In 2007, it became the first asset management firm to be listed on the Main Board of the Hong Kong Stock Exchange.

Over the years, its investment strategies have covered equities, fixed income, multi-asset and alternatives for institutional and individual clients in Asia-Pacific, Europe and the US. The group also offers exchange-traded funds (ETF).

The Malaysia office will house Value Partners’ Southeast Asia-focused Quantitative Investment Solutions (QIS) initiatives such as ETFs, as well as new business areas, including shariah-compliant funds.

On the distribution front, the Malaysian office is a natural extension of the strong network and brand that Value Partners has established in the country through its business partners.

Michael William Greenall, managing director of Value Partners’ Southeast Asia Business, will be leading the Malaysia office and the group’s business expansion efforts in the region.

“We think the Malaysian asset management industry still has room for another competitor. The local players here are well-established and strong. We respect them, but we also have 25 years of experience in Hong Kong,” says Cheah.

Interestingly, he concedes that Value Partners made a lot of mistakes in Hong Kong, but that also meant it learnt many lessons in a very competitive market.

“Although those lessons were very painful, they can be very useful for us in Malaysia.”

He explains that unlike Malaysia and most other Asian countries, Hong Kong is a level playing field where neither protection or favouritism is shown to any local fund manager.

“That’s why no local fund house in Hong Kong can become big. From day one, you are competing with multinational brands. We can name at least 20 to 30 Hong Kong startups, similar to me, where a guy left a big company to start his own boutique firm, but they never survive beyond three to five years,” he says.

Creating a world-class firm

Cheah claims Value Partners is the biggest success story in the history of Hong Kong’s asset management industry, but he is not resting on his laurels. He aims to transform the group into a world-class asset manager.

“We have promised the market that we will do anything possible to become a world-class asset management company. Coming back to Malaysia has always been part of my plans.”

He points out that similar socioeconomic conditions — huge savings, rising demand for professional fund managers, the development of an increasingly sophisticated society — seen in the US after World War Two are coming together now in Southeast Asia.

“If I have a little bit of luck, and if the world does not fall apart in the next three to four years, I should be able to do it. I want to do it before I retire completely. I am already 65 years old,” he says.

Last year, Value Partners’ net profit soared 1,390% to HK$2.05 billion — the highest in its 25-year history — from HK$138 million in 2016, underpinned by a surge in performance fees.

In addition to its Hong Kong headquarters and new office in Kuala Lumpur, Value Partners also operates in Shanghai, Shenzhen, Singapore and London.

Cheah, who had stints at the Asian Wall Street Journal, Asiaweek, The Standard and TVB in Hong Kong, recalls that he made a mid-career switch in 1989, from reporter to head of research and proprietary trader at Morgan Greenfell, one of the oldest British investment firms.

Four years later, he started Value Partners with his partner V-Nee Yeh.

Of the initial AUM of US$5 million the duo managed when Value Partners first started in 1993, about 20% came from Cheah, from the bonuses he saved while he was with Morgan Grenfell.

Today, Value Partners manages nearly US$17 billion, but Cheah has set his sights much higher. “In our internal planning, we are looking to at least double our AUM in the next three to five years. We think it is achievable if we can get a retail licence in China. To double our AUM, we need China. But if we can get China, maybe what I told you would be conservative,” he says.

It is learnt that in China, Value Partners already has various licences to do wholesale asset management and private equity.

“If they continue to deregulate and give us more licences, which allow us to do retail, I believe the future for Value Partners is going to be very bright. This is a big market with the world’s biggest pool of savings, a lot of money to be managed,” Cheah says confidently.

At the moment, he notes, the global asset management industry is still very much dominated by Western brands.

“It would be nice to see a brand from Asia or Southeast Asia succeed as a world-class competitor. To do that, maybe I need a bit of help from Malaysia too. You never know.”

Value Partners intends to raise about US$150 million to US$200 million from Malaysia — targeting private banking clients and high-net-worth individuals— within the next two years. “I am not in a hurry to make money here, but in a hurry to get it right,” Cheah sums up.

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