China Expands Equity Investment Pilot for Asset Managers

A report from Xinhua on Sept. 25th, 2024:

The National Financial Regulatory Administration announced on Tuesday the expansion of the pilot program for equity investments by financial asset management companies.

According to a circular issued by the administration, the pilot program will now extend beyond Shanghai to include 17 other cities, including Beijing, Tianjin, Chongqing, Nanjing, Hangzhou, Hefei, Jinan, Wuhan, Changsha, Guangzhou, Chengdu, Xi’an, Ningbo, Xiamen, Qingdao, Shenzhen and Suzhou.

Since 2020, financial asset management companies established by major commercial banks have been conducting equity investment pilots in Shanghai. The circular introduces adjustments to the policies governing the Shanghai pilot program.

It relaxes the limits on the amounts and ratios of equity investments. The percentage of on-balance sheet funds that financial asset management companies can allocate to equity investments has been increased from 4 percent to 10 percent of total assets as of the end of the previous quarter.

Additionally, the maximum amount that can be invested in a single private equity fund has been raised from 20 percent to 30 percent of that fund’s total issuance size.

The circular also enhances the due diligence exemption and performance evaluation systems.

The administration stated that it will guide five financial asset management companies in effectively implementing these policy measures and actively promoting the rollout of more projects.

At the same time, it will collaborate with relevant departments to summarize experiences, optimize supporting policies, and further explore the expansion of pilot cities, ensuring that pilot programs yield tangible results.