BROADCASTS.com

Hamilton Tang, managing partner of Chinese private equity firm SMC Capital China, is betting on horses; or more importantly, the growing number of wealthy Chinese who want to own one. Back in 2012, SMC invested RMB22 million (US$3 million) in Rider Horse Co., Ltd, a Chinese firm engaged in the age-old art of horse trading. With SMC's support and driven by growing demand from aspirational consumers eager to mimic the lifestyles of U.K. or European elite, the company has since expanded into horse breeding, managing horse clubs and equestrian events. Revenue has increased more than six fold. Despite a national ban on horse race betting in 2000, Rider Horse is among the most successful horse racing event organizers in China, Tang said during an interview on the sidelines of the HKVCA Asia Private Equity Forum 2017 in Hong Kong. The company imports roughly two hundred horses each year, including New Zealand thoroughbreds to meet demand from aspiring Chinese consumers engaged in recreational riding, playing polo and racing. But this ride is almost over for SMC, which hopes to gain a handsome return on investment when Rider Horse completes an initial public offering later this year. After SMC's initial investment, Rider Horse went on to raise a RMB45 million series B round led by CDF-Capital in 2013, and a RMB120 million series C round from Jiangsu Delta Capital Investment Management Co., Ltd, DT Capital Partners, Jiangxi Gaoqi Investment and Jimei Investment in 2014. It raised another RMB120 million series D round in 2015 from undisclosed investors in 2015, according to the company's website. The thorny question if whether Rider Horse's IPO can cross the finish line under current market conditions. A listing on China's A-shares market now requires years of waiting time. An IPO on the country's over-the-counter market, the so-called New Third Board, can be completed more quickly, but faces the critical problem of low liquidity. Nevertheless, Tang said the company is aiming to file for an IPO during the first quarter 2017, five years after its initial investment in the horse trade. You can listen to our conversation above or read a Q&A below. Don't forget to subscribe to China Money Podcast for free in the iTunes store, or subscribe to China Money Network weekly newsletters. You can also subscribe to China Money Podcast's Youtube channel or Youku channel. Q:Could you give us a short introduction to SMC Capital China? A: We have been a China private equity specialist for the past 14 years. We started our business way back in 2003, and in the past few years, we have been focused on the consumer sector in China, in particular consumer upgrades, consumer tech and cross-border deals. We focus on growth stage and typically are series A lead investors (in our deals). At the moment, we manage three private equity funds in addition to some co-investments pockets and deals that use our own balance sheet, with around US$700 million to US$800 million under management. Our most recent private equity fund, which is a vintage 2011 vehicle, secured US$100 million. Q: Back in 2012, SMC Capital launched a joint venture with Chinese equestrian company Rider Horse Co., Ltd. Could you tell us a little bit about how that company has grown over the past few years? A: Yes, we invested RMB22 million (US$3 million) in the company. Since our investment, the company has increased revenues by more than six times. Besides that, what I think is even more important is the composition of its revenues. When we met Lang Lin, the founder of the company, in 2011 or 2012, the business was entirely a horse trading business. But with our help, particularly helping with cross-border engagement, the company today is much more diversified. The company still has the horses buying and selling business, it also has a strong breeding program. It is also the largest importer of thoroughbred horses from New Zealand. In addition,