Taiwan relaxes controls on commodity PE funds

15 July 2014   Category: News, Asia, Global, Taiwan   By Hui Ching-hoo

Taiwan’s Financial Supervisory Commission (FSC) has loosened controls on private equity (PE) by allowing domestic asset managers to raise funds for commodity-linked PE investments.  

The relaxation in rules was effective from the start of this week, according to a report from Commercial Times.

The FSC told local media that designated PE funds should be structured to link with spot commodities such as gold, mining, oil, and soybean. The maximum weighting to commodities is capped at 40% of the fund’s net asset value.

However, the PE funds can get around the constraint by investing in overseas commodity funds. In this context, PE funds can enlarge their exposure to commodities to up to 100%.  

The FSC added that PE funds will only be permitted to distribute to sophisticated investors with total assets of more than NT$10 million (US$330,000).   

The FSC explained that Taiwanese investors have lacked channels to access overseas-listed gold funds, so the commission is taking steps to broaden their investment scope with the relaxation of commodity PE funds.

Up to the end of May, domestic PE funds in Taiwan had a combined AUM of NT$12 billion.