Hong Kong-headquartered Value Partners Group suffered a dramatic 89% decline in profits last year after a sharp tumble in performance fees revenue.

The firm only collected HK$56m in gross performance fees against HK$2.6bn the previous year.

That sent net profit crashing  from HK$2.1bn in 2017 to only HK$229.5m last year.

Assets under management shrank 10% to US$15.0bn from a year ago.

The firm described 2018 as one of the most challenging in its recent history as most funds in Asia suffered net losses after last year’s highly turbulent markets.

Au King Lun, the group’s chief executive officer, said waves of self-offs in financial markets in Asia on fears over the US-China trade war, rising US interest rates and a slowdown in global economic growth, among other, ravaged investor sentiment.

Despite the setback Au cited several positives including a 28% growth in the firm’s China business with AuM growing to more than $1.1bn.

During the year the group’s flagship fund was included in the mutual recognition of funds scheme between Hong Kong and the mainland allowing the group to sell the Hong Kong-domiciled fund to retail investors in the mainland.

The group’s High-Dividend Stocks Fund is currently applying to be included in the scheme.

The group is about launch its first private equity fund in the mainland in the weeks ahead.

The fund will invest in China’s private higher education and vocational education sectors and will be co-managed with the Hong Kong-listed China Education Group – one of China’s largest private education companies and will allow foreign investors exposure to direct investments in private universities and junior colleges in China.

In January, Value Partners inaugurated its first private credit fund to provide alternative sources of financing to mid-sized companies in the region.

The group is also scheduled to launch a new fund in the real estate private equity arena that will offer the same Asia-Pacific core-plus strategy as a fund launched in June 2017. Value Partners said the latter achieved an IRR above initial target.

Two years after establishing a London office, the group said good progress has been made in growing business in Europe.

The firm also hired its first US-based employees in the second half in preparation for the opening of a hub in Boston to serve North America especially targeting institutional investors.

The group also opened in October an office in Malaysia to serve its hub in Southeast Asia.

Profits nosedive at Value Partners on AsiaHedge.