Profile: Kerrie Chung, Welkin Capital Management

The Drawdown (TDD): You joined Welkin in 2017. What was the setup like when you started?

Kerrie Chung (KC): Around the time I joined Welkin, the firm had successfully launched fund II and hired more staff in Shanghai to support the increased deal sourcing. As our team was growing, we also moved into a newly renovated office in Hong Kong. I recall being very impressed by the team because they were young, talented and super energetic professionals. Given that Welkin has two offices in Hong Kong and Shanghai, the company also introduced office offsites in Phuket, Korea and Shanghai to enable the whole team to meet and build stronger relationships with each other - with the ultimate aim of creating a better, more efficient working environment.

Prior to Welkin, I worked at Hony Capital, which is a very large Chinese GP that launched the first billion dollar fund in China. During my three years there, I focused on fund administration as the teams and processes were already very established.

Joining Welkin gave me the opportunity to put more of my stamp on the firm and its processes, because it’s a much younger platform. With my prior experience, I already had the knowledge of what would or wouldn’t work to make our processes more efficient, so I implemented systems to strengthen our finance function.

TDD: What have you achieved so far?

KC: We enhanced our investor communications by implementing an investor portal, which is now used across the business.

Additionally at the firm level, I’ve rolled out an expense reimbursement system to improve efficiency and minimise human errors. The system ensures we’re able to meet the reporting standards required across Hong Kong and Shanghai, the latter of which has variations due to specific invoices and receipts for tax purposes.

We’re always keeping abreast of vendors in the market to see what might work to improve our working environment. What’s very key to us is ensuring we find the right partners or providers which can understand the way we work and operate, given that we domicile funds in both Cayman and across mainland China.

TDD: What do you find challenging?

KC: The pandemic was very challenging for us operationally because both Hong Kong and mainland China were in very heavy lockdowns for months at a time. This meant our Shanghai colleagues, for example, couldn’t go to the office, the bank or out to meet potential investors or investee companies for some time.

More generally, the regulatory landscape is constantly changing. We operate across mainland China, Hong Kong, Cayman Islands and the British Virgin Islands (BVI), all of which have their own nuances. So it is tricky to stay on top of those.

TDD: Welkin outsources fund administration for its US dollar funds, but handles fund administration for its RMB funds in-house. Can you describe the differences between both types of fund management?

KC: Overall, we follow the same processes and procedures for fund reporting for our US dollar funds as well as our RMB funds. The main difference between the two is the language used. We use Chinese for our RMB fund communications and reporting, and English for the US vehicles.

In China, we don’t yet have an industry-specific tech system such as eFront or Investran, which can cater to our specific processes and Chinese language. Hopefully this will change in the future but until then, it remains a very manual process so we can adhere to our Asian LP requests and requirements.

TDD: What would you say are the key differences in investor requests/ preferences between Asian LPs compared to US or European LPs?

KC: I’d say one example is our European LP requests around ESG and diversity & inclusion are more advanced than those from our Asian LPs. European investors are further along in their journey than we are, but these topics are a large focus for Asian investors and its importance is increasing.

Overall, we want to demonstrate best practice to all our global investors, no matter where they are based or which fund (US dollar or RMB) they are committed to. To achieve this, we provide the same uniformed reports, which adhere to international reporting standards, to our RMB fund investors, as we do to our US dollar fund LPs. While we might be providing slightly more detailed information on certain topics for our RMB funds, it’s an opportunity for us to show transparency, and that these topics are very much on our radar.

TDD: Welkin signed up to UN PRI in 2017, around the same time you joined. How involved are you with ESG at the firm? How is it handled?

KC: ESG is embedded in our processes so it is a very frontal focus when we look to invest in a portfolio business. It’s currently handled by our senior team, as Hong Kong’s SFC introduced ESG reporting requirements, but we don’t have a dedicated ESG person yet.

TDD: What is Welkin’s tech stack? How involved are you with the implementation?

KC: During the pandemic we outsourced our IT to vendors and we’ve been working closely with them ever since. This enabled us to focus on the constantly changing and uncertain environment, knowing the tech side of our business was taken care of.

And of course we outsource our Cayman fund administration to an international fund administrator who has familiarity with that jurisdiction.

Regarding implementation, when we introduced our investor portal, as I’m the primary user, I was heavily involved to ensure it was the right solution and would work well for our processes.

TDD: What are your key focuses for the next six to 12 months?

KC: Keeping up with the regulatory landscape in Hong Kong and mainland China, given that it is constantly evolving. For example, the BVI and Cayman just rolled out economic substance rules last year, while Hong Kong’s SFC rolled out its ESG reporting requirements. So I’ll be getting to grips with those and ensuring we’re on top of any new changes that come our way.

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Balancing act

According to Chung, Welkin has increased its focus on D&I and prides itself on its balanced team, compared with some of its peers. “Currently, 30% of our investment team are women, and as director of finance, I’m also part of the management committee,” she says. “In fact, around half of the Asian GP CFOs I’m friends with are women.”

The firm doesn’t stop at gender. When it comes to hiring, Welkin welcomes different employee backgrounds to encourage a diversity of thought among the team. “Our current employees have various backgrounds in terms of where they were raised and where they were educated. Currently, the team has a breadth of experience from mainland China, Hong Kong, Australia, Canada, the UK and the US.