Opinion: Global hedge fund managers enter Shanghai

After two years waiting and much anticipation, the Shanghai Qualified Domestic Limited Partner (QDLP) programme was finally launched in July 2013. Even though the Shanghai Finance Office (SFO), which oversees the QDLP, has not issued a formal announcement to date, it has been reported in Chinese and international media that six global hedge fund managers were awarded the QDLP licence – Och Ziff, Citadel, Oaktree, Canyon, Man and Winton. Each has been awarded a quota of $50 million (less than many people expected) to invest the QDLP proceeds in offshore funds. Sources say that most if not all of these managers have experience in or are currently managing money for Beijing.

Under the QDLP programme, global hedge fund managers are permitted to raise funds from Chinese investors (high net worth individuals and large-sized institutional investors) in China and invest the proceeds in offshore hedge funds. The QDLP regulations have not been publicly released, but it is said that global managers are required to establish the manager entity and the fund LLP in Shanghai to qualify for the pilot programme – they can, however, fundraise from investors China-wide. To qualify as QDLPs, managers are said to need to be equipped with an assets under management (AUM) of $10 billion or above, a good track record and a stellar reputation in the global hedge fund industry.