How best to structure renminbi funds

Author: | Published: 19 Sep 2011

Renminbi (Rmb) denominated funds present some of the biggest challenges in terms of complying with Institutional Limited Partner Association (ILPA) private equity principles.

Weil Gotshal & Manges’ partner and Asia funds practice head, John Fadely told delegates at IFLR’s Asia Private Equity Forum on September that the proliferation of Rmb funds has created China-specific problems relating to transparency and conflicts of interest between Rmb and US dollar vehicles advised by the same investment manager.

China’s domestic private equity fund industry formerly consisted primarily of US dollar-denominated offshore funds, but in 2007 China’s Partnership Enterprise Law allowed limited liability partnerships (LPs) to be used as fund vehicles and thereby led to the development of a small but growing local investor base.

These new LPs first looked to managers that already had a strong...