Singapore, 8 January 2014 – Oversea-Chinese Banking Corporation Limited (“OCBC Bank”) today announced that it has launched a USD100 million private equity fund (“Fund”) under the Shanghai Qualified Foreign Limited Partner (“QFLP”) Pilot Programme, facilitating the Bank’s direct investments in onshore domestic Chinese companies as it aims to increase its exposure to private equity assets in China over the next five years.

OCBC Capital (Shanghai) Equity Investment Fund, L.P., set up under the provisions of a licence obtained from the Shanghai QFLP Pilot Programme, eliminates the need for extensive regulatory approval processes and mitigates the issue of foreign capital convertability typically faced by offshore private equity funds investing into onshore Chinese companies. The Fund allows OCBC Bank to convert up to USD100 million worth of foreign denominated capital into Renminbi to make multiple investments into domestic Chinese companies directly. This translates into the Bank enjoying greater access to onshore companies and provides for an accelerated deal-making process.

The alternative entails companies having to set up an offshore structure in order to receive foreign currency denominated funds which are then brought back onshore and converted into Renminbi for domestic investments, subject to extensive regulatory approvals. While this remains a viable channel for the Bank to adopt, the Fund now functions as a complementary and localised platform allowing the Bank to ramp up on its private equity investments in Chinese companies.

Managed by the newly established fund manager, OCBC Capital (Shanghai) Equity Investment Management Co. Ltd., the Fund is expected to invest in Privately-Owned Enterprises (POEs) in the growth stages with the intention of eventually listing these companies on the China’s A-shares market. The focus will be on channelling the funds towards investees in sectors such as Modern Agriculture, Consumer, Healthcare, Clean and Environmental Technology and Advanced Manufacturing.

Mr Than Su Ee, OCBC Bank’s Head of Mezzanine Capital Unit, said: “The establishment of the private equity fund under the QFLP Pilot Programme is a significant development for OCBC’s private equity activities in China. The ability to make direct local currency investments into Chinese companies helps to a certain extent level the playing field, enabling us to compete more effectively against the local private equity fund managers.

It will also pave the way for us to increase our private equity activities in China over the next five years. China is expected to be a dominant private equity market in Asia. It is a key market for us and one that we intend to make further inroads into as we continue to raise our profile and build our networks in the country.”

Shanghai’s QFLP Pilot Programme

Since launching the Shanghai QFLP Pilot Programme in January 2011, the Shanghai authorities have received and approved more than 20 pilot enterprise applications. Private Equity institutions such as Carlyle, Blackstone, and DT Capital have been approved as pilot enterprises. As the first and only financial institution in Southeast Asia to set up a QFLP Fund in Shanghai, OCBC Bank will tap on the Fund to gain greater access into onshore private equity transactions as it focuses on growing its private equity business in China.

OCBC Bank’s Private Equity Business

OCBC Bank, through its proprietary investment arm - Mezzanine Capital Unit (Private Equity & Special Opportunities) (“MCU”), has been investing in private companies in China and Southeast Asia since 2003, with a general focus on the agriculture, oil & gas, resources, consumer, manufacturing and real estate sectors. In recognition of MCU’s track record as an active private equity investor in the Greater China region, it has been awarded “2013 China Top 5 Best Institutional Investor (Modern Agriculture Category)” by China Venture Group, a leading research and consulting institute focusing on China’s Venture Capital and Private Equity investment industry.