Man Group has confirmed that it is one of six hedge funds to receive the green light to operate in China.
Within the next few months, the London-based hedge fund will be able to raise $50 million from institutions in China to invest around the world, as part of a pilot program in China’s financial city of Shanghai.
It is one of a series of small steps that Chinese officials have taken in recent months to dismantle the barriers that separate their country from global markets. Wall Street and other financial hubs had been watching for these changes for years.
“It’s quite exciting, actually,†said Pierre Lagrange, chairman of Man Group Asia and co-founder of GLG Partners who oversees Man Group’s long- and short-equity strategy.
“I think everyone and their mother wanted to get in, and we’re very happy and proud to have been selected,†Mr. Lagrange said. The fund has been working to get approval in China for several years, he said.
Regulators have also granted Oaktree, Och-Ziff, Citadel and Canyon Partners, all based in the United States, and the British firm Winton Capital permission under a test program called the Qualified Domestic Limited Partner program, according to people familiar with the program. Each fund is expected to be allocated a quota of $50 million on a trial basis, totaling $300 million, these people said. Man Group was the only one of the six to confirm that it had been chosen by the Chinese authorities.
The news of the trial program was first reported by the 21st Century Business Herald, a Chinese newspaper. The hedge funds requested to be able to raise more than the initial $50 million but Shanghai’s regulators are still testing the waters, according to the report.
China’s new leadership is fighting within itself over how to carry out the financial reforms necessary to open up its financial borders. Its top leaders have been pushing to speed up the changes, according to a person involved in the government program who would not speak on the record because of a nondisclosure agreement.
As part of the move, Shanghai is expected announce a free trade zone in the coming months, which would open the door for other financial services firms eager to tap what is expected to be the biggest source of wealth for decades to come.
In 2010, Man acquired GLG Partners for $1.6 billion, creating one of the world’s biggest hedge funds, with more than a 100 people on the ground in Asia. Roughly a quarter of its $52 billion in assets under management are from Asian clients, Mr. Lagrange said.
