Shanghai plans to expand its pilot scheme to allow more foreign investors to join yuan-denominated private-equity funds so that they can invest money raised abroad in China without seeking permission from the national foreign exchange regulator.

The review of a second batch of foreign applicants to the Qualified Foreign Limited Partners program came nearly two months after the city approved its first batch of three firms, including Blackstone, Carlyle Group and DT Capital Partners in mid-March.

Besides the three buyout funds, the authorities are also considering awarding the QFLP status to other types of foreign investors, such as high-tech firms, China Securities Journal cited unnamed sources as saying yesterday.

The government also hopes to promote foreign capital and expertise to boost the country's PE industry and to draw more long-term investors to China, the sources said.

All applicants should be registered in Shanghai and they must possess sound investment teams and experience in equity fund management in China. Preference will be given to those who have previous successful investment records.

Beijing and Tianjin will also be allowed to run the QFLP program so overseas investors can convert dollars into yuan for PE investment in China under a certain quota.

Blackstone and Carlyle Group got a quota of US$100 million each while that for DT Capital is pending, according to the paper.