Chinese private equity and hedge funds are going under at a record pace in an increasingly stringent regulatory environment, according to new data analysed by the Financial Times.
In the first half of 2018, Beijing-run Asset Management Association of China (AMAC) “lost contact” with 163 alternative asset managers, over 70% of the total for the whole of last year. This means that more private funds are failing to renew their three-month registrations with AMAC as the law requires, with some simply disappearing leaving investors out of pocket.
From the 163 funds, over 70% are private equity or venture capital funds, according to the National Business Daily. The remainder are largely unconstrained funds buying public stocks.
In recent years, Beijing has toughened its stance on debt growth among financial institutions leading to the severing of financing channels for many asset managers. Unable to link up with the country’s major banks to source credit in the fundraising process, many non-bank financial institutions face bankruptcy.