China Construction Bank (Chongqing and Singapore branches) and ADDX have entered a partnership to help domestic investors in China participate in the country’s official offshore investment scheme.
ADDX is a full-service capital markets platform with Monetary Authority of Singapore (MAS) licenses for the issuance, custody and secondary trading of digital securities
The two financial institutions signed a memorandum of understanding (MOU) that paves the way for them to work together on the custody and distribution of a $200 million quota allocation under the QDLP [Qualified Domestic Limited Partnership] scheme.
Launched in 2012, QDLP allows investors in China to participate in renminbi funds focused on overseas investment opportunities across both public market and private market products.
The MOU will allow ADDX to operationalise the QDLP scheme for investors through a collaboration with China Construction Bank. Under the MOU, the bank could be appointed to act as the custodian bank for the $200 million in investments made on ADDX through the ICHAM fund. China Construction Bank (Chongqing branch) could also distribute to its wealth clients the fund units under the QDLP allocation.
Last year, ADDX reached an agreement with the Singapore-regulated wealth and fund management company ICHAM, which has received a $200 million allocation as part of the Chongqing government’s overall $5 billion QDLP quota.
Under the agreement, 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 including private equity funds, venture capital funds, real estate funds, hedge funds, pre-IPO equity, bonds and structured products.
China Construction Bank is the sixth most valuable bank in the world with a market capitalisation at the end of 2021 of $175 billion.
ADDX CEO Ms Oi-Yee Choo said: “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.”
Founded in 2017, ADDX uses blockchain and smart contract technology to automate manual processes that have thus far made it inefficient for private market securities to be distributed to a large number of investors. Its shareholders include Singapore Exchange (SGX), the Stock Exchange of Thailand (SET), Temasek subsidiary Heliconia Capital and the Development Bank of Japan (DBJ)
(Writing by SA Kader; Editing by Anoop Menon)