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Jonathan,
Interesting article below.

Devon Archer
646 436 3745

Begin forwarded message:

> From: "Dan McClory" <mcclory.dj@gmail.com>
> Date: December 2, 2014 at 1:25:15 PM EST
> To: "Jason Galanis" <jason@holmbycompanies.com>, "Devon Archer" <darcher@rosemontseneca.com>, "Hugh DP Dunkerley Conf Call" <hugh@dunkerley.us>
> Subject: FW: China enables national pension to invest more assets offshore (11/30/14)
>
> Hi Devon—See the important highlight below on how China’s recent rules relaxing has opened the door to international PE investing.
> Dan
> (11/30/14)
>
> http://www.ft.com/intl/cms/s/0/101c820c-7724-11e4-8273-00144feabdc0.html#axzz3KlHscAFJ
>
>
> China enables national pension to invest more assets offshore
>
> Madison Marriage
>
> ©Reuters
> China's State Council last week released an announcement clarifying rules governing its National Social Security Fund, the fifth-largest pension fund in the world
> China has relaxed rules around foreign investment for its national pension fund, raising expectations within the international asset management community of potential future business wins.
> China’s State Council last week released an announcement clarifying rules governing its National Social Security Fund, the fifth-largest pension fund in the world, with $205bn of assets.
> One of the most significant statements made by the council was that onshore assets held by the pension fund could be used for offshore investments, according to Z-Ben, the Shanghai-based asset management consultancy.
> The announcement bodes well for international fund houses hoping to pick up new assets from Chinese institutional investors.Z-Ben said: “By allowing dedicated onshore assets to be invested offshore, the NSSF will broaden the range of potential investments available to it, hopefully leading to higher returns. There will potentially be opportunities for more offshore mandates as well.”
> The announcement also reduces liquidity requirements around investments made by the pension fund, enabling it to increase allocations to private equity and other illiquid asset classes.
> Andrew Telfer, senior partner at Baillie Gifford, the Edinburgh-based fund house, said: “A small number of [pension] funds in China invest internationally, but we expect that to change over the next few years. The growth in assets from Asia has trebled in the past five years.”
> Baillie Gifford is “actively considering” opening its first Asian office in response to these changes, Mr Telfer added. Most of the group’s staff are currently housed in Edinburgh, but it also has a small presence in London and New York.
> Stewart Aldcroft, Asia chief executive of CitiTrust, Citigroup’s securities and funds services business, who is based in Hong Kong, said: “International fund managers are constantly trawling these funds for more money to manage on their behalf. It is estimated there are more than 120 international mandates now given out by mainland [Chinese] institutions and [China’s sovereign wealth fund]. There is always an opportunity.”
> Mark Konyn, chief executive of Hong Kong-based Cathay Conning Asset Management, added: “The fund has been managed fairly conservatively over the past 14 years and this looks to be an attempt to clarify guidelines and potentially adjust the asset allocation away from cash deposits.
> “With rates coming down in China and the potential for greater currency volatility, the opportunity to diversify further into international asset classes increases. This is certainly something global managers will be looking at very closely.”
> In addition, the State Council has proposed punitive measures for individuals involved in the running of the fund who have engaged in illegal activities. Yoon Ng, Asia research director at Cerulli Associates, the asset management consultancy, said these measures were “in line with recent audits done on CIC [China’s sovereign wealth fund, which found instances of mismanagement”.
> =2