CIRC implements new rule on foreign PE investments

The regulator provided a basic framework for offshore investments from insurance funds back in 2007. At that time, activity was limited to Hong Kong.

The new rules - which were announced on the CIRC's website last week - allow insurers to invest in offshore companies in the financial services, elderly care, healthcare, energy, resources, automobile services and modern agriculture industries. Concerning real estate, investments are restricted to mature commercial properties and office buildings located in central areas of major cities in developed countries.

Insurers may also invest in overseas private equity funds that target growth-stage companies. The size of a specific fund should be no less than $300 million and the GP's paid-in capital should reach a minimum of $15 million. Cumulative assets under management should be above $1 billion.

Investments in offshore fund-of-funds (FoFs) are also allowed. However, these FoFs must not invest in other FoFs.

The overall cap on offshore investments by insurance companies remains unchanged at 15% of total assets.

While Chinese insurers currently have a big chunk of their assets in cash and other liquid deposits, the insurance regulator has in recent months widened its efforts to diversify their investment channels.

In July, the CIRC allowed insurers to invest up to 10% of their total assets in private equity. Investment in the asset class was previously capped at 5%. The move would bring a total of $50 billion of fresh capital injected into unlisted companies.

In the same month, the regulator also permitted insurance companies to outsource their investment management businesses to brokerages and fund houses. According to the rule, fund houses and brokerages must be registered in China to qualify as managers for insurers' assets.

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• Topics
• Greater China
• Regulation
• insurance
• CIRC
• Outbound investment
• China