Shanghai foreign-invested PE pilot starts: a number of policy breakthroughs are still concerned (VC294)

Add another weight to the construction of Shanghai International Financial Center.

A few days ago, the Shanghai Municipal Finance Office, the Municipal Commission of Commerce and the Municipal Administration for Industry and Commerce announced the "Implementation Measures on the Pilot Work of Foreign-Invested Equity Investment Enterprises", and the pilot work on foreign-invested equity investment enterprises (PE) was officially launched. This move is also considered by the industry as a pilot of Qualified Foreign Limited Partners (QFLP).

Multiple policy breakthroughs

According to the news released by the Shanghai Municipal Finance Office, through the pilot work of foreign equity investment enterprises, attracting high-quality overseas long-term capital and driving domestic social capital is conducive to promoting the development of RMB equity investment funds. At the same time, the introduction of excellent international equity investment management teams and the cultivation of local management talents will help promote the development of the domestic equity investment industry. In addition, strengthening investment guidance and focusing on emerging strategic industries will help promote economic transformation and structural adjustment.

At the same time, the Shanghai Financial Office believes that gathering a group of world-class equity investment management institutions and funds to settle in Shanghai is conducive to enhancing the radiation and service functions of the Shanghai International Financial Center.

The Shanghai Municipal Commission of Commerce website quoted Xinhua News Agency as saying that Shanghai allows foreign-invested fund management companies to use part of their foreign exchange capital to settle foreign exchange funds for investment in equity investment funds raised and approved, and approves that foreign-funded fund management companies should not contribute more than When the total amount of funds raised is 5%, and there is no overseas LP (limited partner), the fund enjoys "national treatment" and is not restricted by the investment field. These are unprecedented policy breakthroughs.

In accordance with the provisions of the Measures, Shanghai established a joint meeting on the pilot work of foreign-funded equity investment enterprises in Shanghai, responsible for advancing the pilot work of Shanghai's foreign-funded equity investment enterprises, and implemented full-process management on the establishment, account opening, foreign exchange settlement, and investment of foreign-funded equity investment enterprises.

Among them, in the aspect of trial review, it is planned to review the foreign-funded equity investment enterprises established by the city in accordance with the law and in need of foreign exchange business, and select foreign-funded PEs with the participation of long-term institutional investors such as foreign pension funds, charity funds, university funds, etc. to give the status of pilot enterprises. The record management will implement two levels of record management in the urban area for pilot foreign-invested equity investment enterprises established in Shanghai, that is, "district preliminary review, city record". Establish a reporting system for major incidents of foreign-invested equity investment enterprises through filing, and strengthen supervision over the financing channels and domestic investment orientation of foreign-invested equity investment enterprises.

At the same time, the measures are clear, the scope of business prohibited by foreign equity investment companies, such as secondary market transactions, financial derivatives transactions, non-self-use real estate, etc.

The next step is still concerned

Foreign-invested equity investment enterprise (PE) refers to raising funds from specific objects including foreign investors in a non-public manner, conducting equity investment in domestic unlisted enterprises as the main business, and providing technology, management and market to the enterprise. New financial institutions with value-added services.

Despite the policy breakthroughs, for the foreign-funded PEs eager to get more "national treatment", there are still details of suspense in the Shanghai pilot.

Susan Monroe, a partner of Shiqiang Law Offices in Beijing, said: "Although the release of the pilot approach is a milestone for the development of private equity investment in China, the international PE community is still waiting for a clearer implementation The introduction of the method. For example, the industry has predicted that the test point enterprises will enjoy a total exchange rate of 3 billion US dollars, and the exchange rate of each pilot company will not exceed 50% of its investment. However, in the "Pilot Measures" Mention how the foreign exchange quota system will work. The industry expects that the Shanghai Foreign Exchange Administration will soon release relevant interpretation regulations to better promote the implementation of the "Pilot Measures."

In response, Lu Zheng, senior economist at Industrial Bank, believes that the country ’s breakthrough in capital account opening policy is aimed at promoting the marketization of exchange rate interest rates. He analyzed that during the "Twelfth Five-Year Plan" period, the "two-rate" marketization will accelerate, and not only may breakthroughs be made in key areas, but even the possibility of striving for completion will not be ruled out. If there are strict capital controls, it is actually impossible to find the so-called equilibrium exchange rate; if the equilibrium exchange rate is difficult to find, the marketization of the interest rate on the other side of the exchange rate marketization coin will not be far away!

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