The Hong Kong Limited Partnership Fund — An Attractive Alternative During an Economic Downturn

December 02, 2022 | BY

Susan Mok

Geoffrey Chan, Sophie Xue, and Nicholas Poon of Skadden, Arps, Slate, Meagher & Flom examine how the Hong Kong Limited Partnership Fund, which serves as a cost and tax efficient vehicle for private equity transactions, could become a popular alternative to traditional offshore fund structures for PE investments and fundraising in Greater China

Summary

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  • Hong Kong Limited Partnership Funds have been available since August 2020
  • A related carried interest tax concession scheme came into force in 2021
  • The new funds structure features contractual flexibility; investor limited liability and other protections; investor access to information; a high level of confidentiality; and low registration, operational and maintenance costs
  • Hong Kong Limited Partnership Funds are expected to offer an attractive route for private equity investments and capital raising during difficult economic times

The Hong Kong Limited Partnership Fund (LPF) regime can serve as a cost-effective and tax-efficient vehicle for private equity transactions. The LPF has also emerged as a useful fundraising tool for fund sponsors and investors in Greater China. Going forward, the regime could be used more and more as an alternative to traditional fund structures for PE investments and fundraising.

The HK LPF Regime

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