Foreign investors will be allowed to set up funds and apply for the qualified foreign limited partner (QFLP) pilot scheme in the Guangdong-Macau cooperation zone in Hengqin.
The “pilot measures” will be effective starting 29 January 2022, according to a statement issued by a joint management committee of Macau SAR and Guangdong province last week.
With a QFLP licence, firms can raise money from onshore and offshore clients for private equity projects in the mainland.
The scheme aims to create a more convenient investment environment and provide strong system guarantee for overseas capital. “The new scheme represents an important step supporting the development of Macau’s financial services industry,” the statement said.
The pilot measures include three main issues. First, there will be no mandatory requirements imposed on the scale of foreign shareholders’ or partners’ assets under management, the scale of their own assets and the holding of financial licences.
Second, there will be no restrictions on the registered capital, initial capital contribution ratio and capital contribution period for foreign investors.
Finally, the investment projects in the mainland include equities of unlisted companies, non-publicly issued or traded stocks of listed companies, convertible bonds, dept-to-equity swaps, shares of equity funds, and participation in allotments as original shareholders of listed companies.
In addition, foreign companies can also participate in investing in domestic private equity investment funds and venture capital funds. They must be private equity institutions and registered with the Asset Management Association of China, according to the pilot measures.
Hengqin is an area located in the southern part of Zhuhai in Guangdong province, adjacent to Macau. The Chinese government said in September 2021 that the development of the cooperation zone in Hengqin is “major good news” for Macao. It will develop new industries to help promote Macao’s economic diversification.
The QFLP scheme was first launched in 2010, and has subsequently expanded to 10 other mainland cities. It is one of several measures to attract the inflow of foreign capital and promote the opening up of mainland China’s financial markets.
Others include the qualified domestic limited partnership scheme which 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.