In early February 2020, Haitou Global anticipated the inevitable global spread of Covid-19, based on its first-hand experience of SARS in 2003 in China.
In early February 2020, Haitou Global anticipated the inevitable global spread of Covid-19, based on its first-hand experience of SARS in 2003 in China.
Reacting to Covid-19
“The first thing we did was protect our team,” says Jerry Wang, CEO of Haitou Global and Managing Partner of Haitou Global Credit Fund. “Our Beijing team didn’t come back to the office after Chinese New Year and our New York team started working from home after the first case in Westchester, NY.”
The next priority was to protect assets. Haitou started to lower its exposure and duration and raise liquidity. So, when investors redeemed a third of their fund in three months, Haitou had sufficient funds to return their capital.
And the third was to improve communications. “We increased communication with our local partners from monthly to weekly,” says Wang. “Our API system pulled in fresh data on loan performance daily. We also set up monthly Zoom conference calls with our investors.”
In terms of performance, Haitou’s credit fund targets a return of 12 per cent, and the fund delivered 12.07 per cent in 2020.
Wang comments: “We are confident in our lending strategy in emerging markets. We maintained our exposure and only redeemed to satisfy redemptions.”
Haitou’s assets are also protected by collateral and guarantee structures, and bad debts incurred during the worst period of pandemic were paid back 100 per cent when the platforms recovered, based on protective clauses.
Expanding markets
To build on this performance, Haitou is expanding into new markets, such as Mexico and Pakistan, and is diversifying into other assets, including farmer loans, payroll loans and small business loans.
Haitou continues to build research and operations capacity in its Beijing office, and plans to add USD50 million new capital for its credit fund in the next three to six months.
The lessons that Haitou learned during the pandemic are becoming part of the firm’s culture. Wang comments: “We learned to stick to your guns. Keep faith in your strategy, team and partners during the darkest hours. Once riding off market volatility, you’ll be back on track.
“We learned to be sceptical. We used our own judgement, absorbing pandemic information from all sources. We responded early to the pandemic. Better to be overreacting than sorry.
“And we learned to over-communicate. We write letters, shoot videos, host conferences, and do whatever we can to communicate directly to investors, to understand their requirements and to deliver transparency.”
Going forwards, Haitou has three key priorities. “Build a diverse team: all our team members are Asian or Hispanic, which is crucial when we invest in Asia, Africa and Latin America. The majority of our team are female, including two investment managers. A diverse team enables us to understand, communicate and commit to emerging markets and disadvantaged communities,” Wang says.
“Invest in technology: our tech team is over 40 per cent of our headcount. Technology improves our investment and operations processes, increases our efficiency and capacity, and is a critical part of our success.”
“And drive social impact: ESG is embedded in our investment thesis,” Wang says. “Every investment we make must make positive social impact to our communities, whether a Pakistani social bank lending to Muslim women, or an Indonesian collective lending to coffee farmers.”
Jerry Wang, CEO, Managing Partner, Haitou Global
Jerry Wang founded Haitou Global in 2014 in New York and manages its strategy and investments as CEO. Prior to founding Haitou Global, Wang was an Investment Manager at University of Notre Dame’s Investments Office, where he managed a portfolio of private and Asian investments. Wang holds a Bachelor’s degree in Engineering from Tsinghua University, and Master’s degrees in Engineering and Business Administration from University of Notre Dame. Wang is CFA and CAIA charter holder.
