Selena Li

HONG KONG, (Reuters) – KKR (NYSE:), and BlackRock (NYSE 🙂 received Chinese regulatory approvals allowing them to create local units that can raise money for overseas investments. Official filings indicated this.

They are the most significant approvals of this type so far in 2011 and indicate that Beijing continues to push forward with opening its financial market to foreigners, despite fears over currency devaluation and long COVID-related lockdowns within its financial centre, Shanghai.

According to filings, the two fund units of these firms cleared all hurdles in order to obtain quotas under China’s 9-year-old QDLP programme. This allowed them to use funds from institutional and high-net-worth investors to put into offshore funds.

In just three weeks the yuan fell by 5%. The sharp depreciation of the yuan in recent years has caused Chinese authorities to stop outbound investment schemes like QDLP and halt licence and quota issuing out of concern that capital outflows could increase currency volatility.

Nicholas Omondfi (director at Z-Ben Advisors in Shanghai), said that the most recent regulatory action “falls within the policy continuum”.

Multiple financial experts have recognized over time that there is an internationalization of the domestic market and the benefits to bringing in expertise from abroad.

QDLP “QDLP” is an integral part of our path forward. I don’t anticipate a reversal of the quota commitments that regulators have made.

KKR, an industry regulator, registered the wholly-owned unit of its fund management unit at Asset Management Association of China under the QDLP scheme on April 21, according to an official record.

According to local regulations, the registration allows the U.S.-based private equity firm to start raising funds for overseas investments. The registration was de facto approved by KKR and took KKR nine months.

The Chinese- and foreign-based asset managers will each share $5 million worth of QDLP Quotas. Since its inception in 2013, the programme has allocated more than $50 Billion in quotas through local governments.

A separate announcement was made by the Shanghai Municipal Office of Finance Service last week, stating that BlackRock’s Fund Management Unit has been granted a QDLP Licence.

The statement stated, “Despite all the impacts of the COVID virus outbreak, numerous global asset managers remain actively applying” for QDLP pilot. It also said that “firmly believed” in Shanghai’s future as an international financial hub.

KKR declined to comment. A request by Reuters for more information was not answered immediately by AMAC. Beyond its last week statement, the Shanghai government refused to comment.