Shanghai QFLP program for non-Chinese RMB LPs approved
The pilot Qualified Foreign Limited Partners (QFLP) guidelines floated in Shanghai to allow international LPs to invest into Shanghai-incorporated RMB-denominated private equity funds have been approved by China’s central financial regulators, according to statements by city financial officials in PRC media.
Modeled after the existing Qualified Foreign Institutional Investor (QFII) scheme, and the Foreign Invested Venture Capital Enterprise (FIVCE) VC fund structure, the plan allows for global investors to receive a foreign exchange quota of around $100 million to be converted into RMB for investment in RMB funds. The scheme was initially thought to apply only to funds domiciled in Shanghai’s Pudong New Area, but other reports indicate that it may be opened to funds incorporated throughout the municipal government’s jurisdiction.
Reports also indicate that vehicles invested under the new scheme may be treated as entirely domestic PRC entities if their capital is less than 50% foreign-derived, entitling these funds to far more lenient approval processes and other benefits. Beijing and Tianjin have also made applications for approval of similar schemes, but the Shanghai proposal is the first to receive official approval.
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