China Aims to Expand Hedge Fund Investing by Licensing Foreign Shops
Offshore hedge funds should soon start winning approval to open offices in Shanghai and raise capital from the city’s institutional and high-net-worth investors.
By Allen T. Cheng
FOR INDUS CAPITAL PARTNERS, 2013 COULD BE THE year of the hedge fund in mainland China. General counsel and partner Brian Guzman and his colleagues at New Yorkbased private investment fund adviser Indus, which was spun out of legendary hedge fund manager George Soros firm more than a decade ago, have been eyeing the Chinese market for some time. With regulators poised to allow foreign hedge funds to set up shop in the countrys second-largest city, theyre optimistic.
Indus, which runs long-short strategies, plans to apply to the proposed qualified domestic limited partner (QDLP) program in early 2013. Under QDLP non-Chinese hedge funds would be able to establish marketing offices in Shanghai and gather assets from its institutional and high-net-worth investors. These are tentative steps to open up to global investors, says Guzman, whose firm opened a Hong Kong office in 2000 and manages $4 billion, roughly half of it in Greater China equities. Our hope, he adds, is that regulators look at our industry with rational sense and see that firms such as ours are low-risk, low-volatility, long-term investors who add a lot to the markets in general, but specifically liquidity, efficiency and price discovery, which can ultimately reduce volatility. ....