PE investors should know contractual restrictions before trading

hile a new trading platform might provide some advantages, private equity (PE) investors still need to be aware of contractual restrictions placed on areas such as transfer of shares, transaction structure and valuation, say counsel.

China has announced a new policy governing the trading of PE funds with the Beijing Financial Assets Exchange (BFAE). This is the first regulation on PE fund trading and appoints the BFAE as the first and only market for PE funds and projects in the country.

The Beijing Financial Assets Exchange Private Equity Fund Trading Regulations sets out provisions on trading conduct and the protection of each party's “legitimate rights and interests”. It opens up a new exit route for PE investors, in addition to the traditional exits of initial public offerings (IPOs), M&A and buy-back.