VMS Group, a prominent multifamily office in Hong Kong with a strong background in private equity, is embarking on its first venture into digital assets amidst increasing regulatory clarity and growing institutional interest in the cryptocurrency sector.
According to a recent report by Bloomberg, the firm, which oversees assets worth close to $4 billion for some of the city’s most affluent families, is planning to invest up to $10 million in Re7 Capital, a hedge fund based in London that focuses on decentralized finance strategies.
Elton Cheung, managing partner at VMS, stated that this strategic move signifies a shift in the firm’s approach to liquidity and diversification. Established twenty years ago, VMS has traditionally concentrated on private equity investments and long-term positions across various industries such as real estate, pharmaceuticals, and technology. However, with companies choosing to remain private for longer periods and exit opportunities becoming more challenging to predict, VMS is now exploring more liquid investment strategies, including digital assets.
Instead of directly purchasing volatile tokens like Bitcoin, VMS has opted to collaborate with Re7, which implements a market-neutral approach. The hedge fund generates yield by providing liquidity on decentralized exchanges and lending stablecoins, while employing hedging techniques to mitigate price fluctuations. This methodology aligns closely with the risk management frameworks of traditional family offices that seek exposure to the crypto market without taking on speculative risks.
According to Evgeny Gokhberg, the founder of Re7, the appeal of investing in crypto lies in the asymmetry of risk and return. Rather than viewing crypto solely in terms of ‘all or nothing’ outcomes, serious investors prioritize strategies that offer consistent returns while minimizing downside risks.
In addition to hedge fund investments, VMS is also exploring broader applications of digital assets under the leadership of Zhi Li, who was appointed to oversee digital asset investments from London. The team is evaluating various use cases, including blockchain payments and infrastructure, with a particular interest in integrating crypto-based transactions into a real estate development project in Vietnam.
Li highlighted the increasing interest among institutional and family investors in regulated exposure to digital assets, driven by the preferences of younger generations within wealthy families. As family offices adapt to evolving wealth dynamics and generational preferences, VMS’s foray into the crypto space reflects a larger trend. Legacy capital, once hesitant about cryptocurrencies, is now recognizing the potential for structured investments, consistent yields, and strategic positioning in the digital asset market.
In conclusion, VMS Group’s entry into the world of crypto assets signifies a significant step for the Hong Kong-based firm, showcasing a strategic shift towards embracing the opportunities presented by digital assets in today’s financial landscape.