China’s asset managers brace for ‘winter’ amid tightened rules on fundraising in yuan

New asset management rules in China will weigh heavily on the yuan fundraising environment this year, as the amount of capital raised and number of new yuan funds is likely to drop significantly from 2017.

Fundraising by private equity and venture capital funds in the first quarter fell 75 per cent on year to US$11.03 billion while the number of funds dropped by 55 per cent to 103 from 228, according to data from CV Source.

Fund managers have voiced gloomy views about the yuan fundraising environment in the coming months, citing rules unveiled in April, including tightened eligibility criteria for qualified investors and a ban on collaboration with commercial banks.

Financial institutions will have until the end of 2020 as a transitionary period before full compliance.

Wang Yonghua, founder and chairman of private equity fund Tiantu Capital, said the fundraising environment so far this year has been tough, and he does not see any improvement on the horizon.

“I believe that in five years’ time, the number of newly closed yuan funds per year could be significantly reduced,” he said.