Launched in 2012 in Shanghai, the qualified domestic limited partner (QDLP) scheme allows foreign fund managers based in the city, within assigned quotas, to invest in offshore traditional and alternative investments, including overseas equity and bond fund funds, hedge funds and property.
Earlier this year, the programme has been extended to Beijing, according to a statement from the Beijing Local Financial Supervision and Administration. In total, Beijing can allocate $5bn worth of quotas to participating asset managers. Like the Shanghai programme, participating managers will have to establish a wholly foreign-owned enterprise (WFOE) in Beijing before applying for the QDLP scheme in the capital.
Law firm Simmons & Simmons believes that Beijing’s QDLP programme is anticipated to become a major competitor to the Shanghai programme, according to a statement from the firm.
For example, under the Beijing programme, applicants are likely to receive an initial quota of up to $500m if the underlying products are alternative investment funds and a $1bn quota if the underlying products are retail funds, the firm said. Initially, applicants in Shanghai are given a smaller initial quota, usually at $50m.
However, the granting of a larger quota per application might suggest a smaller total number of applicants in comparison with that of the Shanghai programme.
Applicants
Oaktree Capital became the first foreign asset manager to participate in Beijing’s QDLP scheme with a $500m quota, according to the statement. This move comes after the US-based firm received the approval to establish a WFOE in Beijing, with a registered capital of $5.42m in February this year. The firm also owns a QDLP WFOE in Shanghai, in which it has two QDLP funds.
Seven other firms, including Amundi, Bridgewater Associates and Primavera have also applied for the scheme and collectively are asking for nearly $2bn in quotas. Eight other firms have indicated that they intend to participate in the scheme in Beijing.
