HSBC has facilitated the first onshore private fund investment via the Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors (QFII/RQFII) scheme in mainland China.
As the custodian, HSBC will provide services including investment scope update filing, payment transaction, and assets custody for this market-first transaction completed by Baring Asset Management.
The fund is the first private fixed income fund launched by Barings Investment Management Shanghai, Barings’ wholly foreign-owned enterprise (WFOE) with private fund management license (PFM) in mainland China.
The new QFII/RQFII rules came into effect on 1 November 2020 and have caused the investment scope for offshore investors to expand.
It now includes investment in private funds lawfully founded by a securities or futures institution, or by a private fund manager registered at Asset Management Association of China.
The new rules have also lowered entry requirements and simplified procedures under the combined quota-free QFII and RQFII.
Brian Godins, head of securities services, Asia-Pacific at HSBC, said: ”Allowing QFII/RQFII to invest in onshore private funds is an important breakthrough particularly for offshore investors with WFOE PFM established in mainland China.”
According to Godins, it helps WFOE PFMs who have not yet established a domestic distribution channel or brand recognition in mainland China, to obtain seed capital from its affiliated QFII/RQFII when launching onshore private funds.
“This will not only help boost the attractiveness of QFII/RQFII and draw more foreign capital into mainland China but also facilitate the development of the local asset management industry,” he explained.
