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Buyout firms could see Chinese fundraising boost from relaxed insurance investment rules

11 Oct 2013

insurance contract formPrivate equity funds in China look could receive a major boost from the country’s insurers as the industry regulator reportedly readies plans to triple the percentage of assets the businesses can use to back the asset class.

Insurers will be able to invest up to 30 per cent of their assets in private equity and listed shares, well up from the respective current caps of 10 per cent and 25 per cent according to China Securities Journal.

Infrastructure and real estate projects in China also look set to see more investment action from the insurance industry as their caps are raised from 20 per cent to 30 per cent.

The new rules, which are in draft form, could also see the China Insurance Regulatory Commission scrap restrictions on the type of infrastructure projects insurers could target.

Private equity fundraising in China met “significant headwinds” in the first half of 2013 according to data gathered by professional services firm EY.

Slowing economic growth, regulatory uncertainty and a lack of liquidity has prompted LPs to take a ‘wait and see’ approach to new commitments on the continent according to the study, titled Private Equity Roundup China.

But it said that differentiated firms with strong teams and proven track records had continued to close funds and would be active players in the current market.

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