The removal of some restrictions and relaxation of formal requirements have opened Zhuhai to more high-quality private equity investment institutions and foreign investment.
The document Pilot Measures for Qualified Foreign Limited Partners (QFLP) was approved May 21 at an executive meeting of the Municipal People's Government.
Removed are requirements for domestic equity investment management enterprises regarding place of registration, asset scale, asset scale of overseas shareholders, minimum registered capital/subscribed capital contribution, initial investment proportion, monetary contribution ratio and investment deadline.
Hengqin Financial Island [Photo courtesy Zhuhai Daily]
Permitted is a more flexible fund management structure, including two general partners (GP) or separation of manager and GP. The investment scope is also extended to shares not publicly issued or traded, debt-for-equity swaps, equity funds, and initial offerings.
Also allowed is QFLP investment in domestic private equities and venture capital funds in accordance with laws and regulations. Securities companies and other financial institutions recognized by financial supervision authorities may engage in fund custody. Funds of funds are acceptable so that Macao funds can invest in Chinese mainland projects via the form of limited partners.
Strengthened is the supervision of major affairs such as change of fund custodians, as well as investment and financial information reporting.
Mu Hong, director of the Zhuhai Financial Work Bureau, said that policies have been perfected over two years of pilot work adapted to new industrial development trends with the support of the Zhuhai Central Bureau of the State Administration of Foreign Exchange.
Zhuhai has made remarkable achievements since it began the QFLP pilot. By the end of 2020, it was home to 14 QFLP enterprises with total subscribed capital contribution of $4 billion.
The scale and sources of foreign investment in Zhuhai have also been expanded, with QFLP accounting for 30.12 percent of local direct foreign investment in 2019 and 2020. In addition, Zhuhai's private equity business has diversified.
The enhanced influence and competitiveness of the local financial industry has driven the start of Macao's equity investment industry and promoted the moderate diversification of Macao's economy.