Recently, it was reported by various media sources that the
National Development Reform Commission (NDRC) had issued certain
policies requiring an RMB fund (the 'FIE GP Fund') with a
foreign invested enterprise (the 'FIE') acting as the
general partner (the 'FIE GP') and domestic investors
(exclusive of FIEs established in China) acting as limited partners
to be regarded as a foreign investor. Being defined as a foreign
investor means that the portfolio investments of such a FIE GP Fund
shall be subject to foreign investment approvals, which are read by
the public as referring to the approvals from the Ministry of
Commerce or its local counterpart (MOFCOM).
International private equity firms often structure their RMB
funds in the form of FIE GP Funds. As a result this news caused
great concern among them because their RMB funds will be defined as
offshore funds in regard to making portfolio investments and as a
result there will probably be little chance of raising
