OCBC launches $100m QFLP fund in Shanghai

The OCBC Capital Equity Investment Fund is permitted 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 mitigates issues of foreign capital convertibility, typically faced by offshore PE funds.

"The ability to make direct local currency investments into Chinese companies helps to certain extent level the playing filed, enabling us to compete more effectively against the local private equity fund managers," Than Su Ee (pictured at the signing ceremony, third from the left), head of OCBC's mezzanine capital unit, said in a statement.

The fund will invest in growth-stage private companies in agriculture, consumer, healthcare, clean technology and manufacturing. It intends to exit investees on the China's A-share market.

Since its launch in 2011, Shanghai's QFLP program has attracted applications from more than 20 PE firms, including The Blackstone Group, The Carlyle Group and DT Capital Partners. Beijing, Chongqing and Shenzhen's Qianhai district have launched similar programs.

Participants in the programs also 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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• Topics
• Greater China
• Regulation
• Fundraising
• China
• QFLP
• Offshore
• Renminbi
• Fundraising
• Singapore