AMP Capital will begin selling the underlying China A shares of the China Growth Fund "as soon as is practicable", with the proceeds to be held in US dollars in a bank account in China until repatriated to investors.
Unitholders of the AMP Capital China Growth Fund (AGF) voted in favour of a resolution to wind up the fund at an extraordinary general meeting on 28 July 2016.
AMP Capital yesterday outlined its strategy for the wind-up of AGF, which will see the fund manager sell approximately 95 per cent of the value of the underlying portfolio of China A shares.
The sale of the shares, which InvestorDaily understands will take place in days rather than weeks, will result in cash proceeds that will be held in a bank account in China in US dollars until repatriated from China.
AMP Capital said in a statement it would reduce the base management fees within AGF from 1.35 per cent down to 0.40 per cent, effective 1 September 2016.
The initial distribution of profits and cash held in Hong Kong of approximately $40 million will be made before the end of September 2016, the statement said.
Finally, $305 million of AGF's principal will be repatriated during the next three months.
"This is the maximum permitted under the current regulations and an application has already been made to our Chinese custodian," said AMP Capital.
AMP Capital Funds Management chairman Adam Tindall said the firm is committed to returning funds to unitholders as quickly as possible.
"We have decided that the best approach is an ‘upfront sell-down option’ where all of the underlying portfolio of China A shares is sold (other than shares that are suspended or in trading halt), and then the net proceeds are distributed in tranches as soon as tax and regulatory approvals are received by the Chinese authorities," Mr Tindall said.
"We believe this strategy is fair and reasonable to all unitholders and provides for an efficient and economic pathway to completion of the wind-up in the shortest possible timeframe and provides more certainty to unitholders."
KPMG previously verified AMP Capital's timeframe of nine to 18 months for the wind-up and return of the last dollar to investors.
The repatriation of the remaining profits from China will be subject to Chinese tax and regulatory approvals.
"Profits require regulatory clearances before they can be repatriated, which differ depending on when the profits were made," AMP Capital said.
"The relevant Chinese authorities do not currently have an established procedure for the remittance of profits realised before 17 November 2009 and after 17 November 2014."