Chinese insurers win approval to invest in VC funds

Total allocations to venture capital funds must not exceed 2% of an insurance company's total assets and exposure to a single fund is capped at 20%, according to a statement released by the China Insurance Regulatory Commission (CIRC).

The agency estimates that the change could result in up to RMB200 billion ($32.1 billion) being invested in small and medium-sized enterprises.

In 2010, the CIRC allowed insurers to start making LP commitments to domestic private equity funds. Last year, the cap on their total exposure to private equity funds and private companies was raised to 10% of total assets, up from 5%. Fast-track approvals have also been introduced for PE fund commitments, with the average waiting time reduced from one year to a few months.

Insurers got the green light to invest in offshore private equity funds in late 2012. They are restricted to backing managers with a mature team, an established track record and net assets and cumulative assets under management of no less than $1 billion; a fund should also have at least $300 million of committed capital.

Chinese insurers are setting up alternative investment subsidiaries, covering credit assets, trust products as well as traditional private equity funds. However, progress is said to be relatively slow. Industry participants say unfamiliarity with asset allocation strategies and an emphasis on short-term investment returns are holding back the industry.

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• Topics
• Fundraising
• Venture
• LPs
• Greater China
• CIRC
• China
• insurance
• Fundraising
• LPs
• Venture