Shanghai allows offshore RMB to participate in private equity
Shanghai has reportedly given a green light for foreign players to invest in unlisted Chinese companies using renminbi capital raised offshore. The Renminbi Qualified Foreign Limited Partner (RQFLP) initiative is part of China’s efforts to promote the globalization of its currency and help Shanghai become an onshore renminbi convertibility hub.
The Hong Kong unit of Haitong Securities - Haitong International - will be first to participate in the pilot program, which was set up by the several regulatory authorities including the State Administration of Foreign Exchange and the National Development and Reform Commission.
Haitong will team up with Bank of Shanghai plan to raise up to $100 million in offshore renminbi capital from Hong Kong investors, the Shanghai Securities News reported on Thursday, adding that a memorandum was signed last week.
The program is an extension of Shanghai's Qualified Foreign Limited Partner (QFLP) scheme, which allows overseas investors to purchase stakes in local unlisted companies using foreign currency.
Last December, China issued rules for Renminbi Qualified Foreign Institutional Investors (RQFII), allowing investments of overseas renminbi funds to invest in mainland stocks and bonds, but not including private companies.
Meanwhile, Shenzhen is launching a similar renminbi convertibility experiment in Qianhai, a development zone in southern Shenzhen. Under the initiative, any private equity firm registered in the zone will be allowed to raise a local currency fund from Hong Kong. Hony Capital is set to become the first private equity player to enter the special zone.
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