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Barings launches its third QDLP fund

The fund will invest in high yield US and European bonds.
aerial view of shanghai at night

The Barings Global High Yield Bond No.3 Private Fund was registered this week with the Asset Management Association of China (Amac) to be distributed to qualified investors in Mainland China.

It is Barings’ third fund under the qualified domestic limited partnership (QDLP) scheme, and follows two products launched under the scheme in 2019.

“The compelling income generation potential on offer, combined with the large size of the asset class and relatively low sensitivity to interest rate moves warrants a long-term, core allocation within a broader portfolio,” Martin Horne, Barings head of global public fixed income and who oversees the high yield bond strategy, said in a statement.

Barings manages more than $382bn of assets, and its global high yield platform comprises around 90 investment professionals, with a presence across the US and European markets, according to the firm.

The QDLP scheme allows licensed foreign asset managers to raise renminbi-denominated sums from qualified individuals and institutions in China, with assigned quotas, to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and real estate. The scheme was first launched as pilot in Shanghai in 2013.

Barings’ wholly foreign-owned enterprise in Shanghai received a QDLP licence from Amac in November 2018, according to the records from the association.

The issuance of QDLP funds is the first attempt by Barings’ global business to explore the Chinese market; it is also the first step to achieve independent business development in China, the Shanghai Municipal Financial Regulatory Bureau said in a report in late May.

About 50 global asset managers have received QDLP licenses in Shanghai as of last year, including Blackrock, Man Group and UBS, according to the Bureau.

In late April 2021, the State Administration of Foreign Exchange said that it will double the quota for the Shanghai QDLP pilot by $5bn to $10bn in total.

“The QDLP scheme will be further expanded to help build Shanghai into a globally important asset management and wealth management market,” Pan Gongsheng, deputy governor of the People’s Bank of China, told the 13th Lujiazui Forum 2021 in June.

Amac’s website shows that Barings also has five registered privately offered funds in China.

Part of the Mark Allen Group.