China Readies Rules For Foreign Hedge Fund Fundraising

Jul 12 2012 | 10:05am ET

China is taking the first steps towards allowing its vast and growing domestic wealth to flow into foreign hedge funds.

The country is set to announce a program that would allow its richest citizens to invest in some of the world's largest hedge funds. The plan, called the Qualified Domestic Limited Partner program, has not been formally unveiled and will remain extremely restrictive, but marks another first for the country as it begins to allow more hedge fund activity on its shores.

Hedge funds who want a piece of China's vast personal savings will have to apply for a license in Shanghai, and only the largest hedge funds, those with at least US$10 billion in assets, will be welcome, the Financial Times reports. What's more, China will only allow about US$5 billion to be raised by the foreign hedge funds initially, and all investments will need to be approved by the State Administration of Foreign Exchange.

China will allow some measure of free enterprise: Those hedge funds that win a coveted license will be allowed to fight amongst themselves for as large a slice of the available capital as they can garner, rather than have the money doled out in a more equitable fashion.

China has recently begun relaxing regulations that once all-but-barred hedge funds. In 2010, the country got its first genuine hedge fund, a domestic product. And the country is considering looser rules for foreign investors who want to invest in its stock markets.

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…