Regulator Eyes Fundraising Ceiling Cap Over Unicorn Funds, Report Says
Liao Shumin
/SOURCE : Yicai
Regulator Eyes Fundraising Ceiling Cap Over Unicorn Funds, Report Says

(Yicai Global) June 11 -- China Securities Regulatory Commission, CSRC, has reportedly issued a supervision notice to six fund management companies yesterday, asking them to try to keep the fundraising ceiling of such funds at CNY20 billion (USD3.1 billion). The move came ahead of the official launch of the unicorn funds.

The fund management companies shall not run new advertisement campaigns to promote the funds after they received the notice, reported business daily the 21st Century Business Herald, citing a manager in charge of a fund management company who confirmed that his firm got the regulator's notice yesterday.

If the upper limit of fundraising of the six funds is slashed from original CNY50 billion to CNY20 billion, the combined maximum fundraising scale of the six funds will shrink from CNY300 billion to CNY120 billion.

The 21st Century Business Herald also reported that the six companies were planning to announce the adjustment of fundraising ceilings last night. However, Yicai Global did not find any such announcement on public channels as of the midnight last night. The previous announcements showed the caps of fundraising of the six strategic placement funds were all CNY50 billion.

The strategically placed flexible allocation hybrid funds with a closed period of three years of six fund management companies, namely China Asset Management, China Southern Asset Management, Harvest Fund, China Universal Asset Management, E Fund Management, and China Merchants Funds, got formal approvals from the CSRC on June 6.

Through strategic placement, the six funds will invest in the Chinese Depository Receipts, CDRs, to be issued by unicorns on the A-share market. Tech giants such Xiaomi, Alibaba Group Holding, JD.Com, Baidu and Tencent Holdings are encouraged to issue CDRs.

The market has seen strong promotion of the six strategically placed funds since they were approved. Marketing methods varied ranging from short videos on popular platforms such as Bytedance Technology's Douyin and other commercials showing African children recommending unicorn funds on Taobao, the trading platform of Alibaba, to elderly women distributing leaflets around vegetable markets. Such marketing methods had been rarely seen in funds promotion in the past.

Editor: Mevlut Kati

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Keywords: Unicorn Fund , Capital Ceiling , CDR , Fund Management Company