Examples of transactions under FTZ cross-border investment system

In the General Plan for the China (Shanghai) Pilot Free Trade Zone, it is expressly proposed that liberalisation of the investment sector be broadened to support the carrying out of various forms of offshore investment by various types of investment entities in the zone. Additionally, the recordal system (without approval) should be mainly used to administrate the establishment of enterprises for offshore investment purposes.

The establishment of offshore equity investment companies in the free trade zone (FTZ) is encouraged, and qualified investors are supported in establishing an offshore private equity fund of funds. The Shanghai government has also issued certain complementary regulations on offshore investments by enterprises established in the FTZ. However, there has been a dearth of actual transactions under the new system.

In February 2014, Hony Capital invested RMB186 million (US$30 million) abroad, through the FTZ cross-border investment platform, to acquire PPTV in conjunction with Suning Appliance. This was the first example of an investment abroad by a private equity fund in the FTZ.