China registers first 50 onshore alternative asset managers

March 24, 2014  

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The Asset Management Association of China (AMAC) has officially granted certificates of registration to 50 alternative asset management firms in the country, under a new regulatory regime that will allow them to operate more like their hedge fund counterparts in Hong Kong and internationally.

The newly-approved managers can now directly manage their own funds and market them to qualified institutional and high-net-worth investors, instead of routing them through trust institutions. The approved list includes 33 sunshine or private fund managers and 17 other managers involved in private equity/venture capital investing.

Among the managers given recognition at a ceremony in Beijing last week were Shanghai Chongyang Asset Management, Greenwoods Asset Management, PingAn Russell Investment Management, Pegasus Investment Management (Shanghai) and private equity fund managers CDH Investment Management (Tianjin) and Sequoia Capital Equity Investment Management (Tianjin).

More than a thousand firms have logged into the AMAC and applied to register online since the platform started accepting applications on 7 February.

AMAC has been designated to oversee the alternative asset management industry in China. It has pledged to act on applications within 20 working days after an applicant completes submission of pertinent papers and documents.

The registration of mainland alternative asset management firms came just a few days after the conclusion of the National People’s Congress in Beijing. The tide of AMAC applications provides the most concrete evidence yet on how rapidly the number of sunshine private fund managers in the country has exploded, barely nine months after a new law on securities investment firms took effect.

However, it is not clear when exactly sunshine funds could begin selling directly to qualified investors because the China Securities Regulatory Commission (CSRC) first needs to issue its guidelines on who can be considered as a qualified investor.

AMAC has proposed that qualified high-night-worth investors should have at least CNY5 million ($800,000) in financial assets while institutions should have at least CNY10 million in assets in order to be considered qualified investors for hedge fund products. AMAC also wants minimum subscription for hedge funds to be set at CNY1 million.

Shanghai Chongyang, the biggest sunshine private fund in China with $2 billion in assets under management, says its newest fund, the internally-seeded Chongyang A Share Alpha Hedge Fund, could start trading once trading accounts are obtained from China’s stock exchanges.

Shanghai Chongyang’s president and partner, Wang Qing, noted that the firm will have a higher investment threshold requirement for the new fund, which he says "will be China’s first truly genuine hedge fund".


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