Shanghai welcomes foreign private equity investment

Foreign private equity (PE) investors should be aware of restrictions, governing laws and statutory requirements now that they are able to access onshore capital markets and are privy to relaxed foreign exchange controls, say counsel.

On January 11, three Shanghai governmental agencies jointly introduced a pilot programme that allows qualified foreign PE firms to raise funds denominated in renminbi (Rmb) and enjoy limited currency conversion rights.

Effective on January 22, the Implementing Measures for the Launch of Pilot Foreign-invested Equity Investment Enterprises in the Municipality (上海市关于本市开展外商投资股权投资企业试点工作的实施办法) enables foreign PE fund managers to set up equity investment enterprises and to contribute foreign capital not exceeding 5% of the total amount of the fund. These capital contributions are made in the form of freely convertible currency and will not affect the nature of the enterprise.