Reflection on Nexus Point’s Fifth Anniversary

On March 14th, 2022, we at Nexus Point celebrated our firm’s fifth anniversary. Through the hard work of all of my colleagues, Nexus Point has established itself as the premier mid-market control-oriented private equity firm in Greater China. We have built a team of approximately twenty experienced, exceptional individuals hailing from a diverse set of backgrounds working in our Hong Kong and Shanghai offices. Thanks to the trust placed in us from our world-class investors, we have grown to over US$1.0 billion in assets under management. Our portfolio of seven (soon to be eight) companies has been performing strongly, achieving annual EBITDA growth of over 25% and generating distributions to our investors. We expect our deployment pace to accelerate further now that we have a fully built-out team. At the same time, as our portfolio matures, we are actively evaluating additional liquidity opportunities to achieve profitable returns for our investors.

We are very proud of our accomplishment over the past five years. At this very special moment, I would like to share three principles that have successfully shaped our firm and guided us through these unpredictable times.

It Is All About the Firm Culture and the People

Our firm serves as the focal point where talent, grit and attitude converge to create a truly unique culture – our own special “nexus point”. As a private equity firm, our biggest asset is our people. We recognize that we are not alone in the quest for the best talent. Therefore, it is only natural that outstanding talent will gravitate toward institutions where they can derive intrinsic satisfaction for their accomplishments and be rewarded accordingly. Our goal at Nexus Point has been to create the right environment to attract, retain and motivate exceptional talent.

Our exceptional team, performance-driven culture and positive working environment have enabled us to successfully execute our mid-market control-oriented investment strategy, resulting in our ability to source attractive deals on an exclusive basis, achieve portfolio value creation through revenue and EBITDA growth, effect attractive exits and generate outsized returns to our investors.

Our emphasis and focus on firm culture and our people is at the root of our success. This core belief will always be the bedrock of our firm’s DNA.

There Are Always Uncontrollable Challenges; Focus on Executing Well-Developed Strategies

We operate in a dynamic and ever-changing world where events outside of our control take place regularly. While some of these events may have a positive impact on us, there are inevitably events that either introduce uncertainty or negatively impact us. COVID-19 is a prominent example of such an event, but it is by no means the only one. Operating in Greater China, we have also been impacted by the shifting regulatory landscape and the increasing geopolitical tensions between China and the US, to name a few others.

Fortunately, Nexus Point has weathered these events well and emerged stronger, thanks in large part to our well thought-out strategy of acquiring control in domestic consumption-related businesses in the middle market. This strategy has proven to be highly suitable to the volatile and uncertain operating environment.

There are events that we cannot control; what we can control is to execute our core strategy to the best of our ability, adapting to exogenous factors in the market as appropriate.

Never Be Complacent; Continue to Pursue Excellence and Create Value

The last core principle I would like to share is the notion of pursuit of excellence through value creation. The days of easy returns in China’s private equity industry are over. To remain competitive, we need to pull every lever to create value for our portfolio companies. The goal is to formulate the right strategy and build core competences that will generate distinctive, sustainable advantages.

At Nexus Point, we are very proud of our sector-based approach to securing proprietary deals, our thorough due diligence, and our unyielding focus on portfolio value creation. We firmly believe that value creation is the best way to generate outsized returns for our investors.

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Finally, I’d like to thank all our friends and partners who have supported us thus far in our journey. We have come a long way from that cramped 200-square foot serviced office at the IFC in Central Hong Kong!


About the Author

Kuo Chuan Kung

Founder of Nexus Point

Managing Partner

Hong Kong