China private fund deregistrations jump amid regulatory scrutiny
01/08/2023 10:19
SHANGHAI, Aug 1 (Reuters) -
Chinese private funds have been losing their licenses at a
faster pace this year than in 2022, data shows, as regulators
tighten scrutiny on the $2.9 trillion industry to curb
operational irregularities.
The number of private fund deregistrations, both voluntary
and forced, reached 2,035 from January to July, twice the number
in the same period last year, according to data from the Asset
Management Association of China (AMAC), a body that oversees
China's fund industry.
Private funds in China include hedge funds such as
Bridgewater (China) Investment Management Co Ltd, and private
equity and venture capital funds.
Among the revoked fund licenses, the ones forced by the
regulator jumped significantly this year.
Three-quarters of this year's deregistrations took place in
January.
More than 1,400 funds were seen deregistered by AMAC around
Jan. 20, due to the rules released last January on private
funds' operational irregularities, said Yang Li, partner of Han
Kun Law offices.
Such irregularities include incorrect or incomplete
information disclosure and not having fund products under
management for over a year.
Many in the industry say the license revocation of some
so-called "zombie" and "phantom" funds is healthy for the
development of the country's capital market.
The rise of fund deregistrations this year also comes
against the backdrop of weak investment performance and tough
fundraising environment.
As of June, 152,322 private funds were registered on AMAC,
managing a total assets of 20.77 trillion yuan ($2.90 trillion).
In July, China published new wide-ranging regulations for
the country's private investment fund sector, seeking to better
protect investors and promote innovation.
(Reporting by Li Gu in Shanghai and Tom Westbrook in Singapore;
Editing by Bernadette Baum)
((Li.Gu@thomsonreuters.com;))