In conjunction with Super Return’s China conference in Beijing during March 28-31st, 2011, LPACN successfully arranged a series of meetings for global LPs to meet Chinese regulators and domestic LPs, namely, China Securities Regulatory Commission, Ministry of Commerce, National Development and Reform Commission, China Investment Corporation, National Council for Social Security Fund, China Development Bank Capital and Beijing Municipal Bureau of Financial Work.
At the meeting with Mr. Qi Bin, Director-General of Research and Strategy Center of China Securities Regulatory Commission, the two parties exchanged views on the conflicts between USD and RMB denominated funds, the arbitrage opportunities in the PE industry and the current QFLP Pilot Scheme in Shanghai etc. Mr. Qi also disclosed CSRC’s intention to develop futures and option instruments, the corporate bond market, PE, OTC board and international board on the A share market.
At the meeting with officials from Foreign Investment Administration, Ministry of Commerce, LPACN delegates stated its nature of being a group of long term investors and their intention to help develop China’s PE industries. They also revealed their concerns on the conflicts between USD and RMB denominated funds. The MoC officials echoed on this, and indicated that MoC had already delegated certain rights to local governments in order to speed up the approval process for foreign investments. LPACN delegates mentioned ILPA’s recently issued Private Equity Principles 2.0, and discussed globally PE regulatory environment. MoC officials showed interest in learning more about the Principles and expressed their willingness to consider this as reference when they make their policies.
LPACN delegates met Mr. Liu Jianjun, director of Financial Affairs Division, Department of Fiscal and Financial Affairs at National Development and Reform Commission. Mr. Liu introduced the functions and responsibilities of his division; explained the two regulations NDRC issued on venture capital and private equity industry in 2005 and this year; and explained in detail China’s taxation structure for PE, especially with the two setups as Corporation and Limited Partnership. When the topic about the QFLP Pilot Scheme in Shanghai was brought up, Mr. Liu mentioned the government’s intention to control hot money, and expressed welcome to long term investors. NDRC is exploring the potential to qualify long term LPs on national level and allow them to invest in local RMB funds directly rather than through GPs.
The delegates met Mr. James Ieong, Director of Private Market Investment Department of China Investment Corporation for lunch. Both parties discussed the global economy and investment opportunities in different countries.
LPACN delegates visited China Development Bank Capital and had candid communication with Mr. Lu Jun, Deputy President of CDBC and Ms. Deng Shuang and Ms. Cui Weiwei from Fund Management Division CDBC. Mr. Lu introduced the formation of Guochuang FOF, the first state-level RMB FOF with a target size of RMB 60 billion, and the opportunities and challenges in raising domestic institutional money. The two parties also exchanged their views on fund selection and the development of institutional LP base in China.
The LPACN delegation received a warm welcome at National Council for Social Security Fund. Mr. Wang Zhongmin, Vice Chairman of NSSF together with his PE investment team had a wide ranging discussion with LPACN’s delegates on various topics including the LP structure in China, self-regulation of global PE industry GP value-adding in China and GP/LP cooperation model etc. Both parties agreed that foreign LPs and domestic LPs should work more closely in developing China’s PE industry.
Mr. Huo Xuewen, Party Secretary of Beijing Municipal Bureau of Financial Work hosted a dinner party for LPACN delegation. Representatives from Finance Service Office of Haidian District and Beijing Private Equity Association joined the dinner. Mr. Huo expressed that the city government would like vey much to have more international LP organizations to set up their offices in Beijing and the Municipal Bureau of Financial Work would be happy to provide all the necessary assistance.
This is LPACN’s third round of government visits in the past two years. The visits deepened the mutual understanding and cooperation between global and domestic LPs, and raised profile of LPACN with various government agencies.