Nomura forms PE joint venture in Shenzhen
Japan’s Nomura Asset Management has set up a joint venture with Shenzhen Hua Xia Ren He Capital Management to conduct private equity fund business in China.
According to a statement, Nomura AM won a license through the joint venture to sponsor and manage private equity funds under Qualified Foreign Limited Partner (QFLP) program. The joint venture will be domiciled in the Qianhai Economic Zone in Shenzhen and have RMB13 million ($2 million) in registered capital.
Normura AM sees the venture as a key entry point into the growing Chinese market and aims to enhance its presence and develop new businesses in China. The JV plans to target high net worth individuals and institutional investors in China, as well as providing investment opportunities to foreign investors through the QFLP framework.
The QFLP program was launched in 2011 in Shanghai and then replicated in other major cities, including Beijing, Chongqing and Shenzhen's Qianhai district. More than 20 foreign PE firms have applied for the program, including The Blackstone Group, The Carlyle Group and Infinity Group.
Earlier this year, OCBC Bank launched a private equity venture under the Shanghai QFLP program, which was allowed to convert up to $100 million worth of foreign currency into renminbi to make multiple investments into Chinese companies.
The QFLP license is expected to shorten regulatory approval processes and mitigate issues of foreign capital convertibility, typically faced by offshore PE funds.
Participants in the program are allowed to invest in renminbi-denominated funds without first having to channel their requests through the State Administration for Foreign Exchange. However, renminbi vehicles that include capital from offshore sources don't qualify for local treatment on investments, so they are subject to the same sector restrictions as other foreign players.
A fund raised by a foreign GP with QFLP status would be treated as a pure renminbi fund if all the LPs were domestic investors and the GP's own commitment doesn't exceed 5% of the total corpus.
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