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Hong Kong sets sights on becoming Asian private equity fund hub through new Limited Partnership Fund Bill

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Hong Kong is hoping to establish itself as a prime Asian destination for private equity and venture capital fund launches through the launch of its new Limited Partnership Fund Bill.

The legislation, which was passed on July 9, looks to make Hong Kong an attractive alternative in Asia for domiciling PE, VC and real estate funds. LPF is set to come into force on August 31.

A statement on the impending change from Deloitte China said, “The new LPF regime will not only attract more private funds and family offices to Hong Kong and accelerate the development of asset management industry, it can also drive up demand for capital, talent and expertise into different sectors including technology and professional services along with the tremendous business opportunities inherent to the Greater Bay Area.

“During the recent budget speech, other than Limited Partnership Fund Bill the government also stated that it is also planning to provide tax concessions for carried interest issued by private equity funds operating in Hong Kong, subject to the fulfilment of certain conditions.

“Deloitte expects that once the tax concession is enacted, it should hopefully help address the concern that the taxation of carried interest in Hong Kong has been a contentious issue for [a long time].”

Analysis from global law firm Ashurst said, “With its special ties to Mainland China, Hong Kong serves as a hub for both inbound and outbound investment activity.

“However, with Hong Kong’s lack of a proper legal framework for PE style funds, offshore jurisdictions (predominantly, the Cayman Islands) have long been used to establish PE style funds.

“More recently, Singapore has gained significant traction as a center for establishing and managing PE style funds, owing to its sound legal framework and increasingly broad array of tax treaties.

“The Limited Partnership Fund Bill has been introduced at a time when traditional offshore jurisdictions are under increasing pressure to conform with onshore legislative priorities, many stemming from the Great Financial Crisis of 2008-09.”

It added, “The introduction of the Bill, and its future enactment as legislation, is a significant step towards positioning Hong Kong as an alternative jurisdiction in Asia for establishing PE-style funds.

“Fund managers based in Hong Kong may be particularly drawn to bringing their future funds onshore when raising capital from investors in China or for investing in China.”

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Source: https://www.altassets.net/private-equity-news/by-region/asia-by-region/hong-kong-sets-sights-on-becoming-asian-private-equity-fund-hub-through-new-limited-partnership-fund-bill.html

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