China authorizes PE fund trading, opening new channel for investors

08:59, November 16, 2010      

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China issued a new policy allowing Private Equity (PE) fund trading with the Beijing Financial Assets Exchange (BFAE) on November 13, on what stamps its first regulation on PE fund trading, BFAE made an official announcement on its website Monday.

The Beijing Financial Assets Exchange Private Equity Fund Trading Regulations, also made BFAE the first and only market for PE funds and projects. The document regulates trading conduct and protects each party's legitimate rights and interests. BFAE aims to establish a service platform for the PE industry in China, including sharing information of projects and companies in need of capital, professional sponsoring institutions, et cetera.

Before the new regulation was issued, PE investors only had three channels to cash out in China: IPO, transferring and buying-back stakes. Currently in China, over 80 percent of PE investment projects cash out via IPO, according to Guo Zide, general manager of New Horizon Capital. Those who cannot find open channels to cash out resort to private resources or lockup.

China's PE investments took off in 1998. In the first half of 2010, domestic PE funds raised $19.03 billion, exceeding 2009's total volume.

Source: Global Times


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