CBI member Simmons & Simmons advised the Kuwait Investment Authority on establishing an investment platform in China. The firm helped KIA obtain a license to set-up a wholly foreign-owned enterprise (WFOE) dedicated to asset management in Shanghai. KIA is one of the world’s oldest sovereign wealth funds, and is also one of the world’s largest institutional investors with more than $500 billion in assets.
The Simmons & Simmons team was led by Melody Yang, a funds and corporate partner based in Beijing, who said: “China’s financial sector is constantly opening up to foreign investors. We have seen more institutional investors like KIA as well as asset managers coming to China to expand their asset management business here. We are very pleased to advise on this area and to further contribute to their ambitions in China.”
Ms. Yang and her team coordinated the deal with local government officials from Shanghai Lujiazui Financial City Development Bureau. The deal broke new ground in China since few sovereign wealth funds are allowed to run their own asset management business company in China through an asset management WFOE. Kuwait is the first foreign country to be granted this license since a WFOE license is usually only granted to companies.
Negotiations started two years ago and were far-reaching since KIA hopes to use its Shanghai platform to manage all of KIA’s assets in China, so that it can operate at full capacity. Many other international asset management companies with China operations have decided to forfeit parts of their global business in order to obtain a license to practise in the country at least in-part. However, not only did Simmons & Simmons manage to negotiate a deal allowing KIA to offer its full range of services in China, the license contains a clause extending KIA’s permissions within China to the Investment Office of Kuwait, who is allowed to practise investment management in China on behalf of KIA.
The Kuwait Investment Authority intends to use its Shanghai base to trade shares offered in the Chinese stock exchanges and acquire bonds and direct acquisitions in China companies – particularly within the banking sector and the information technology sector.
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