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Hermitage Capital bets big on AI as it sees tech shaping the future
Founder Sean Xiang Yuqiu says the fund will invest US$500 million in the AI and robotics sectors over the next three years
One of Asia'stop private equity funds is betting big on artificial intelligence and humanoid robots, envisioning a future where AI-powered implants are plugged into human brains, allowing people to experience the world in ways once confined to science fiction.
Xiang, who has been featured in the latest edition of Fortune China magazine's 40 Chinese business elites under 40 released on Tuesday, said Hermitage would invest at least US$500 million in the AI and robotic sectors over the next three years.
With a decade of experience at Wall Street investment bank JPMorgan Chase before founding Hermitage Capital in 2017, Xiang said the company's investments focused on building a global AI ecosystem, ranging from hardware like graphics processing units to large language models (LLMs) and intelligent robotics.
He drew a parallel to humanoid robot making to illustrate his investment strategy. “You need a brain to process information, eyes to observe the world and blood as your power source,” he said. “It must also sense the external world and respond to it effectively. We've invested across all these areas, from foundational AI models to robot chips to solid-state batteries and home robots that free people from tedious chores.”
Computer vision led the first wave of AI's evolution, which was now largely mature, Xiang said. “We are currently riding the natural processing language wave, dominated by LLMs. The foundation models'valuation will still have a five to 10 times return potential.”
He added that the next frontier lay in domain-specific AI applications: transforming law, healthcare, music and programming through deep, specialised integration rather than general-purpose tools.
Among the companies in Hermitage Capital's portfolio awaiting initial public offerings (IPOs) is Hangzhou-based WeDoctor. The AI-enabled online medical services platform revived its fundraising plan on the Hong Kong stock exchange at the end of last year, targeting US$400 million to US$500 million, the Post reported last year. Twenty-three others, including Singapore-based global payment platform Airwallex and US-based ScaleFlux, a computational storage solution provider, were in the pipeline to launch IPOs.
“Humans are really just biological computers,” Xiang said. “When AI becomes this advanced, the only way to transcend our limitations will be through brain-computer interfaces. In 10 or 20 years, everyone will have one. What seems terrifying today – like drilling a hole into your head – will feel completely normal in the future.”
Xiang said he had noticed a modest but encouraging return of Western capital to China's public offering market this year after three turbulent years marked by escalating US-China trade tensions, which kept investors at bay and drove Chinese companies'valuations sharply lower.
“Whether you call it [US-China] competition or struggle, we just have to adapt,” he said, adding that value investing was not just about buying good companies. “It's about identifying, holding and doubling down on quality over time, understanding what will never return, what's cyclical, what's inevitable.”
Hermitage Capital, which has operations in Hong Kong and Shanghai, has investments in 33 companies with assets totalling US$1.5 billion. About 60 per cent of its investments were in Asia with the remainder in the US and Europe.
Seven of the companies it had invested in are listed on the stock exchanges in Hong Kong and the US, including Robotic Horizon, XtalPi, Tencent Music and SenseTime.
