ADDX and China Construction Bank have entered into a partnership to help domestic investors in China take part in the country’s official offshore investment scheme.
The scheme, named the Qualified Domestic Limited Partnership (QDLP) scheme, was created by the Chinese government in 2012. It allows individual investors in China, who have at least two years of investing experience, to take part in renminbi funds focused on overseas investment opportunities. The scheme allows offshore investments in a greater variety of assets which include both public market and private market products.
On June 23, both parties announced the signing of a memorandum of understanding (MOU). The MOU will pave the way for both ADDX and China Construction Bank to work together on the custody and distribution of a US$200 million ($277.1 million) quota allocation under the QDLP scheme.
The MOU will allow ADDX to operationalise the QDLP scheme for investors through its collaboration with China Construction Bank. Under the MOU, the bank could be appointed to act as the custodian bank for the US$200 million in investments made on ADDX through the ICHAM fund. China Construction Bank’s Chongqing branch could also distribute to its wealth clients the fund units under the QDLP allocation.
The ICHAM fund was created in 2021 when ADDX reached an agreement with the Singapore-regulated wealth and fund management company ICHAM. At the time, ICHAM had received an allocation of US$200 million as part of the Chongqing government’s overall US$5 billion QDLP quota.
“As Asia’s largest private market exchange, ADDX is eager to bring the global investment opportunities on our platform to China, Asia’s largest wealth management market. By allowing domestic capital to buy into high-quality offshore assets, China is ensuring its investors can build globally diversified portfolios that are best positioned to preserve and expand gains from the opening-up of the country’s economy over the past few decades,” says ADDX CEO Choo Oi-Yee.
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“The potential enhanced returns from such a move will in turn drive further economic growth in China, as the capital gains from investments flow back into China to create new jobs and to strengthen the buying power of Chinese consumers. In enabling these investments, ADDX is privileged to work with China Construction Bank, a respected and world-leading financial institution,” she adds.
China Construction Bank is one of China’s leading banking groups with a market capitalisation of US$175 billion as at end-2021, making it the sixth most valuable bank in the world.
