ADDX partners China Construction Bank to administer US$200m in QDLP funds quota

PRIVATE market exchange ADDX has entered into a partnership with the Chongqing and Singapore branches of China Construction Bank to help Chinese domestic investors in participate in the country’s official offshore investment scheme.

In a statement on Thursday (Jun 23), ADDX said both financial institutions had signed a memorandum of understanding (MOU) that will enable them to work together on the custody and distribution of a US$200 million quota allocation under the Qualified Domestic Limited Partnership (QDLP) scheme.

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 6th most valuable bank in the world. The bank also has a network of 14,510 branches and more than 351,000 employees.

Under the MOU, China Construction Bank could be appointed to act as the custodian bank for the US$200 million in investments made on ADDX through the ICHAM fund. 

ICHAM is a Singapore-regulated wealth and fund management company which last year received a US$200 million allocation as part of the Chongqing government’s overall US$5 billion QDLP quota. 

China Construction Bank (Chongqing branch) could also distribute the fund units under the QDLP allocation to its wealth clients. 

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ADDX had also reached an agrement with ICHAM last year, under which ADDX will be a key venue for investments from the ICHAM fund in China authorised to raise capital from Chinese institutions and individuals. 

ADDX will offer these Chinese investors access to private market opportunities issued as digital securities, covering a broad range of asset types such as private equity funds, venture capital funds, real estate funds, hedge funds, pre-IPO equity, bonds and structured products.

Launched in 2012, the QDLP allows lets investors in China participate in renminbi funds focused on overseas investment opportunities. 

To take part in QDLP funds, these individual Chinese investors must have 2 years of investing experience and have one of the following –  household financial assets of at least 5 million yuan (S$1.03 million), net household financial assets of at least 3 million yuan, or an individual annual income of at least 0.5 million yuan, averaged over 3 years. 

Unlike other offshore schemes like Qualified Domestic Institutional Investors and Wealth Management Connect, the QDLP allows offshore investments in a greater variety of assets in both public and private markets, instead of just public market products. 

Choo Oi Yee, chief executive of ADDX, said that 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”. 

“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 added.