to Private Equity
investment in China

The PE sector has an important role to play in the post Coronavirus recovery, and nowhere is this role more important than in China, which is the first country to re-emerge after three months of economic hibernation and its first downturn in decades.

Please keep scrolling to reveal further sections

to Private Equity
investment in China

While most industries across the globe are busy responding to the immediate continuity challenges presented by the Coronavirus crisis, one sector is already mobilising to ensure it can play its part to support the recovery cycle.

Private Equity (PE) has an important role to play in the recovery, and nowhere is this role more important than in China, which is the first country to re-emerge after months of economic hibernation and its first downturn in decades. 

Some portfolio companies have been impacted, valuations distorted, and some liquidity and redemption issues encountered. But, despite this, there is dry powder ready to deploy and opportunities to seize. 

Some PE firms have already started to make their move.

FastTrack: to Private Equity investment in China has three main elements:

Tailored for each client’s specific requirements, we offer customised solutions across virtually every need a GP, LP, fund or portfolio company may have.

1. We can help you form your fund. 2. we can take care of your fund’s administration. 3. we can help keep you compliant with rules and regulations
1. We can help you form your fund. Fund Formation: We support the set-up of your end-to-end fund structure. Whether your fund is an offshore structure or an onshore Chinese Limited Partnership or QFLP/QDLP, we are here to help. 2. we can take care of your fund’s administration. Fund Administration: Using our global fund accounting platform and other tech-enabled solutions, we can take care of investor onboarding, capital calls/distributions, fund accounting, NAV and investor statements, waterfall calculations, financial statements, regulatory reporting (FATCA, CRS) and other statutory reporting requirements depending on your fund domicile. 3. we can help keep you compliant with rules and regulations. Corporate Services: We can administer the daily operations of your investment holding companies, fund entities and portfolio companies - in China or other jurisdictions. We can also help you reduce risk, enhance efficiency and comply with rules, regulations and filing requirements. Services such as legal entity management, bookkeeping and accounting, HR & payroll, office space, board meetings, liquidations and regulatory reporting are available and manageable via our proprietary IRIS technology platform.
We can manage your set-up in over 30 jurisdictions whilst helping you stay compliant and on the right side of rules, regulations and filing requirements.
What activity are we seeing?

Throughout the Coronavirus crisis, Intertrust Group has seen volumes pick up across Asia, particularly in China as private equity funds set up new investment structures. For example:

Support the set-up of an onshore Qualified Foreign Limited Partnership (QFLP) for a global asset manager investing into distressed debt and non-performing loan (NPL) opportunities in China. 

Set up new investment structures for a Greater Bay Area focused real estate fund. 

Incorporated substantial new structures for a series of real estate investments by a top US private equity firm.

As fund administrator, we helped successfully launch a new smart cities/real estate fund in Wuhan for an Asia-based investment management firm.

As China’s financial sector has continued to open up to foreign capital, we have seen an increase in investment activity. Post COVID-19, we are now seeing further acceleration across a range of asset classes as private equity investors seek out attractive valuations and distressed opportunities. The following case studies provide examples of how Intertrust has moved quickly to support our clients in the current environment.
Global Distressed Debt Fund
US Private Equity Buyout Firm

With the opening up of China’s non-performing loan segment to foreign investors, Intertrust was brought in to assist the set-up and administration of a Qualified Foreign Limited Partnership (QFLP) Fund.

THE SOLUTION

→ Support the establishment of onshore QFLP

→ RMB fund accounting & reporting

→ Onshore fund vehicle maintenance services, including book keeping, tax filing, treasury, custodian chops/certificates and annual compliance services

→ Set up and maintenance of joint venture vehicle
and various legal entities across Hong Kong and the UK 

Our advantages
→ Cross jurisdictional teams supporting the client across Europe, the UK, China and Hong Kong

→ Local knowledge to help guide our client through a complex local regulatory environment in China

→ Global service delivery standards to ensure our client’s investors receive same level of comfort for their onshore investments in China as they receive in other jurisdictions 

We supported our client with its investment into a Chinese consumer goods company, providing a wide range of services solution across the entire deal lifecycle, from handling the formalities at deal closing to enhancing the operational efficiency of the acquired entity.

THE SOLUTION

Deal structuring & closing
At the outset of the deal, the Intertrust Group team was brought into the process to set up a Hong Kong holding company, consolidate the existing entities of the target as well as working closely with their legal advisor to support the deal closing.

Post deal integration
→ Set-up of a new Hong Kong operating company to host four retail outlets and their employees

→ Performed health check on the past statutory records of the acquired entity and rectify them where applicable

→ Assisted the transition of the personnel from the acquired entity to the combined business

Ongoing operational efficiency
We also manage the back-office administrative activities of the new venture, and offer comprehensive financial management and control solution including:

→ Accounting and reporting

→ Cash flow forecasting and treasury

→ HR and payroll management

What makes Intertrust Group different? As the market readjusts, capital will need to be deployed quickly and legal entity structures set up swiftly. Furthermore, in a dynamic market, funds will need capable administrators to provide additional comfort to their investors. Incorporated in Hong Kong in 1976, today Intertrust has over 240 employees across Hong Kong, Shanghai, Beijing, Guangzhou and Shenzhen.
30 key financial markets around the world. USD460bn Assets Under Administration. 3,500 experts and fund administration specialists. Serving 80% of the Top 50 PE International 300. The latest fund platform technology enabling a high degree of control and visibility 24/7. Wide multi-language capabilities. Deep offshore USD funds and onshore RMB fund experience
Intertrust Group offices in Greater China
Shenzhen, Guangzhou, Beijing, Shanghai, Hong Kong
China remains an attractive destination for PE Investment

The long-term fundamentals of China’s business environment remain sound. China’s sheer size of population, its 400 million and growing middle class and the central government’s policy to prioritise domestic consumption (a stance likely to continue) sets a solid foundation for quality assets.

In addition, a number of recent reforms signals the commitment of China to welcome foreign investment:

China’s Foreign Investment Law (FIL): Effective from 1 January 2020, FIL introduced simplified procedures (such as streamlined entity establishment) and enables foreign investors to enhance their existing joint venture arrangements and better safeguard their intellectual property rights, resulting in a fairer market environment between domestic and foreign players. 

Non-performing Loans (NPLs): China has expanded the capacity of the local asset management sector to purchase and manage NPLs, while also opening up the market to foreign investors via a range of reforms. As part of the Phase One China US Trade Deal, China will allow U.S. firms to apply for asset management company licenses and acquire non-performing loans directly from Chinese banks.

Greater Bay Area (GBA) opportunities – The GBA is China’s plan to integrate Hong Kong, Macau and nine cities in the Pearl River Delta (PRD), including Shenzhen and Guangzhou, into a leading economic and innovation hub for business growth. Each city is rolling out a range of sector-specific initiatives to attract investment.

Hong Kong PE Fund Regime – In March 2020, the new Limited Partnership Funds Bill was passed in Hong Kong, setting the stage for a new funds regime that is anticipated to offer an effective structure for PE firms in the region, creating a new alternative for China-focused PE funds looking to align economic substance with their fund domicile.

How can you seize the opportunities
and minimise the risks?

To find out more about how Intertrust can help Fast Track your opportunities in China, talk to our team today.

Contact Us

Regulatory information is detailed on intertrustgroup.com/legalnotice

TopBuilt with Shorthand