King & Wood Mallesons – Advising the first sovereign fund co-launched by China and the United Arab Emirates
King & Wood Mallesons (KWM) advised on the launch of the first sovereign wealth fund jointly established by China and the United Arab Emirates. The establishment of the fund will significantly strengthen the cooperation between China and the United Arab Emirates, promote collaboration on the Belt and Road strategy, and enhance the international cooperation on capacity and equipment manufacturing.
The fund was jointly established by China Development Bank Capital Corporation Ltd (CDB Capital), the State Administration of Foreign Exchange, and Mubadala Development Company of Abu Dhabi. Launched in December 2015, the fund will invest into energy, infrastructure, high-end manufacturing, clean energy and other high-growth industries.
This deal was innovative in the design of its establishment mode and investment strategy. The fund was established by the subsidiary investment institutions of each government, therefore requiring careful consideration of the policies on currency and foreign exchange.
The investment advisor (IA) of the fund is based and operates in Hong Kong. Therefore, Hong Kong law was used as the governing law for all key fund documents for the IA, covering issues from internal compliance to the IA's daily operations.
KWM acted as the PRC and Hong Kong legal counsels for CDB Capital. KWM provided a one-stop service including negotiations with sovereign parties, offshore analysis, fund structuring and fund formation advice, regulatory compliance requirements and anti-trust law related advice.
KWM’s Hong Kong team of lawyers advised on a wide range issues in connection with the fund’s formation and its subsequent operations such as SFC license issues, leases, employment law issues, etc. Drawing on the experience of the KWM team (many of whom are qualified in both PRC law and common law jurisdictions), their bilingual language capabilities and knowledge of working with Chinese businesses, KWM was able to work seamlessly with the Chinese parties and the Middle East sovereign wealth fund.
This transaction was short listed for the award of “Innovation in Corporate & Commercial Law (Asia-Pacific headquartered law firms)” by the Financial Times Asia Pacific Innovative Lawyers 2016 Awards. The KWM team was led by Beijing partner Gong Mulong and Beijing/Hong Kong partner Helena Huang, with support from Hong Kong partner Guo Sun Lee and Beijing partners Liu Cheng, Liu Zhigang, Wu Wei and Tang Yingmao.