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China gives green light to yuan fundraisings from Hong Kong

25 Mar 2013

news_china_lrgPrivate equity firms will now be able to hold fundraisings in Hong Kong for investments in mainland China after the Asian economic giant reportedly agreed to ease regulations.

The new rules will cover firms operating in Shenzhen’s Qianhai enterprise zone, according to the China Securities Journal, which cited people familiar with the situation.

The rule changes have already been approved by the National Development and Reform Commission and China Development Bank is already preparing to raise RMB50bn ($8bn) from Hong Kong for its Qianhai-based fund.

The Qianhai business area has been designated as a testing ground for softer currency regulations that should encourage foreign investment into China.

Earlier this month the Shenzhen government launched a new programme similar to the Qualified Foreign Limited Partner initiative, allowing foreign investors to convert foreign currency into yuan to invest in private equity funds.

In 2010, Shenzhen’s economy expanded at a fast pace with the GDP rising 12 per cent to RMB951.09bn ($153m).

Shenzhen is fourth on the Chinese mainland in terms of economic power and one of the cities that has generated the biggest economic returns. It is seen as a link between the Chinese mainland and Hong Kong and a transport hub in coastal southern China.

The region’s main industries include high-tech, financial services, foreign trade, shipping and culture.

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