Unlocking Value

We, Argyle Street Management (ASM), plan to vote against the re-election of Elizabeth Kan (Elizabeth) at the annual general meeting of China Merchants China Direct Investments (133 HK, CMCDI) on 20 June 2024.

Here is the #1 reason: conflict of interest.

Who is Elizabeth Kan?

Elizabeth is the Managing Director of the First Eastern Investment Group (FEIG). The principal of the FEIG is Mr. Victor Chu (諸立力, Victor). Elizabeth has been Victor’s long-time lieutenant.

When we, ASM, took over, liquidated and delisted Guangdong Development Fund (another closed-end fund co-founded by Victor) two decades ago, we crossed paths with Victor and Elizabeth.

We know a few things about Victor’s and Elizabeth’s standards of corporate governance.

Does Elizabeth’s senior role in FEIG conflict with her directorship at CMCDI? Is she her loyalty to FEIG or CMCDI?

Victor himself told Nikkei Asia in an interview:

• FEIG is a venture capital firm
• FEIG has invested in more than 200 business, mainly in China
• FEIG has invested in at least three fintech businesses, and at least one of them is in China
• FEIG was “seeking opportunities in fields like artificial intelligence, robots and big data“

If true, then FEIG does exactly what CMCDI does.

For example, CMCDI also invests in payment technology(China UnionPay), artificial intelligence (Moonshot AI), robotics (Flexiv) and big data (iFlytek) in China.

👎 Given the potential extensive overlap between FEIG’s and CMCDI’s businesses, can Elizabeth be truly impartial and avoid conflicts?

👎 For example, if Elizabeth comes across a great investment opportunity in, say, artificial intelligence, will she show the deal to CMCDI or FEIG? How does she decide?

👎 The annual report of CMCDI says that Elizabeth will recuse herself in the event of conflict of interest. If Elizabeth needs to recuse herself on everything that CMCDI does, then what’s the point of having her as a director?

We have a few more questions for Elizabeth. Stay tuned.

Visit us:  UnlockValueChinaMerchants.com

Write to us:  ChinaMerchants@asmhk.com

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我们Argyle Street Management (ASM)计划在招商局中国基金（133 HK，“中国基金“）2024年6月20日举行的股东周年大会中投票反对重选简家宜女士为董事。

第一个原因：利益冲突。

简家宜是谁？

简家宜女士（ “简女士”，英文名KAN Ka Yee, Elizabeth）是第一东方投资集团（“第一东方”）的董事总经理。第一东方的主要负责人是诸立力先生（”诸先生”，英文名Victor Chu Lap Lik）。简女士长期以来是諸先生的副手。

当我们Argyle Street Management在二十年前接管、清算并摘牌了广东发展基金（由诸先生共同创立的另一只封闭式基金）时，我们与诸先生和简女士曾经交过手。

我们對诸先生和简女士企业治理的水平略知一二。

简女士在第一东方的高级职位，是否与她在中国基金的董事职位有利益冲突？

根据日本經濟新聞（Nikkei）的采访，诸先生自己说过：

• 第一东方是一家风险投资公司
• 第一东方已投资超过200家企业，主要在中国
• 第一东方至少投资了三家金融科技企业，其中至少一家在中国
• 第一东方正在“寻求在人工智能、机器人和大数据等领域的机会”

第一东方的业务与中国基金的业务大量重叠。

例如，中国基金也在中国投资金融支付科技（中国银联）、人工智能（月之暗面）、机器人技术（非夕科技）和大数据（科大讯飞）。

鉴于第一东方和中国基金业务之间潜在的大量重叠，简女士能否真正保持中立并避免利益冲突？她对第一东方还是中国基金更忠诚？

例如，如果简女士发现一个在人工智能领域的绝佳投资机会，她会向中国基金还是第一东方展示这笔交易？她如何决定？

中国基金的年度报告称，简女士将在利益冲突的情况下回避。如果简女士需要在中国基金所做的每件事上都回避，那么让她担任董事的意义何在？

我们对简女士还有更多疑问。敬请关注我们的帖子。

访问我们:  UnlockValueChinaMerchants.com

电邮我们:  ChinaMerchants@asmhk.com