PR97668

SHENZHEN, China, Sept. 5, 2022 /Xinhua=KYODO JBN/--

The Shenzhen-Hong Kong cooperation mechanism has introduced a new policy. On

September 2, "Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry

Cooperation Zone Administration - Hong Kong Special Administrative Region

Government Financial Services and the Treasury Bureau on the 18 Measures to

support Qianhai Shenzhen-Hong Kong Venture Capital Joint Development"

(hereinafter referred to as "18 Measures") was released in Shenzhen and Hong

Kong, according to the Authority of Qianhai Shenzhen-Hong Kong Modern Service

Industry Cooperation Zone.

In response to the Hong Kong financial industry's call for broader cooperation

channel between Shenzhen and Hong Kong private equity funds, the "18 Measures"

clearly stipulates that a one-time reward of 2 million yuan will be given to

the Qianhai venture capital institutions listed on the Hong Kong Exchange. The

Qianhai venture capital institutions and their wholly owned subsidiaries in

Hong Kong will be granted a one-time reward of 1 million yuan for sponsoring a

Special Purpose Acquisition Company and getting it listed on the Hong Kong

Exchange. For a Qianhai high-quality infrastructure project listed on the Hong

Kong Exchange in the form of REIT, a one-time incentive of 1 million yuan will

be given to the project's equity owner. Analysts believe that this move will

further facilitate the two-way cross-border investment cooperation between

Shenzhen and Hong Kong.

The policy is an important attempt for deepening cooperation between Shenzhen

and Hong Kong in Qianhai. Cooperation mechanism innovation, the building of

cluster economy, the incentives for closed loop are highlights that sparked

industrial attention.

The industry insiders believe that the "18 Measures" is a solution to the

challenges of the private equity industry in Shenzhen and Hong Kong. Taking

into account the demands of the Hong Kong industry, it will optimize the pilots

in the Qianhai qualified foreign limited partners (QFLP), qualified domestic

investment enterprises (QDIE) and wholly foreign-owned enterprise private fund

management (WFOE PFM); at the same time, Qianhai QDIE management enterprises

are encouraged to invest in Hong Kong's technological innovation, with a reward

of 2% of the actual investment, or a maximum of 500,000 yuan for single input

and annual accumulative sum of up to 2 million yuan for each enterprise.

According to the "18 Measures", a Shenzhen-Hong Kong international venture

capital cluster will be established in Qianhai. The cluster is located in

Qianhai Shenzhen-Hong Kong International Financial City, with an area of about

800,000 square meters. It will host large funds, international capital

management institutions, leading venture capital institutions as well as

private equity investment institutions.

Thanks to the in-depth development of financial cooperation between Shenzhen

and Hong Kong, a number of Hong Kong-funded equity investment enterprises with

special advantages and benchmark effects had already set up business in

Shenzhen. Statistics show that of all the foreign-invested equity investment

management enterprises in Shenzhen, those with Hong Kong funds account for

nearly 70%. Likewise, among the two types of QFLP pilot enterprises, those

involving Hong Kong funds account for about 80% of the total.

Observers said that the "18 Measures" provides all-round support for venture

capital institutions, while promoting private equity secondary market funds (S

funds). It covers fund-raising, investment, management and withdrawal, the

whole process of venture capital industry. The wide range of benefits make the

policy a new breakthrough, which is of great significance to deepening

Shenzhen-Hong Kong financial cooperation on practical innovation.

Source: Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry

Cooperation Zone