Orrick, Herrington & Sutcliffe has helped launched the first open-ended fund company (OFC) in Hong Kong.
The global firm advised Hong Kong-based fund manager Pacific Hawk on the launch of the OFC, which comes after enabling legislation was passed last year and the tax code of the jurisdiction was changed on 1 April to allow the new structure.
“This development will substantially strengthen Hong Kong’s role as an international asset and fund management centre, as well as a fund domicile hub,” Orrick said.
The Orrick team was led by Hong Kong investment funds partner Scott Peterman, who was supported by San Francisco senior counsel Grady Bolding, Hong Kong managing associates Anson Chan and Karen Lam, and London associate Rebecca Kellner.
Orrick said that the pioneering fund is a private fund available only to professional investors, but it expects the launch to “prepare the ground for others to enter the market and offer public funds, in view of the efficient regulatory approval process and strong support from professional advisors and regulators.”
Ann Cooley, chief executive of Pacific Hawk, said that Hong Kong introducing legislation allowing OFCs is a “really positive step for the local economy.”
“Open-ended funds fill a big gap in the range of investment options in Hong Kong and will create new opportunities for fund management professionals, independent directors and for other legal and professional services. If private OFCs can gain authorization to distribute their funds in China, they will be an enormous boost to Hong Kong’s role as Asia’s leading financial centre,” she said.
Peterman said more and more funds are tending to domicile where their substantial activity exists.
“There are clear advantages in having fund managers, auditors, lawyers and other professionals all operating in the same location. This should result in more cost-effective funds,” Peterman said.
Cooley said that more fund managers are expected to set up in the space and offer open-ended funds designed for the general investor.
“While these are sure to include many of the big international names, we also hope to see some local ‘home grown’ entities get involved,” she said.