Funds' future onshore

Author: | Published: 1 Oct 2007

In the last issue of IFLR, staff writer Tom Young demonstrated why more and more private equity houses are establishing funds onshore for Chinese investments. In a follow-up piece, here are tips on how to set one up

This year testifies to feverish interest in the Chinese venture capital community in something called an renminbi fund. But what is a renminbi fund and what are the key issues that a foreign sponsor needs to take into consideration when forming and structuring one?

Renminbi funds may be broadly construed to include any legal entity formed under PRC laws that purports to make renminbi-denominated private equity investments in China.

Private equity funds have been established in various legal forms in China including trusts, limited liability companies and limited partnerships (only recently made available to domestic sponsors). Certain alternatives have also been used including investment management agreements (for a start-up sponsor with a...