Cadwalader Wickersham & Taft has taken the lead role on a key $4bn (£1.99bn) finance deal in China, advising new client China Southern Fund Management on the creation of the first fund under new regulations in the region.

Cadwalader fielded a team under London capital markets partner Angus Duncan and Beijing partner Mark Ropel for China Southern – one of the largest fund management companies in China – as it put together a $4bn fund offering. Associates Yong Kai Wong, Jem
Li and Carol Niu Xiaohui assisted on the deal.

The fund is the first in China to invest solely in foreign equities. This follows new regulations, issued by the China Securities and Regulatory Commission (CSRC) in June, which allow local currency raised from domestic investors in China to be converted into foreign currency for overseas investment.

The fund was over-subscribed, with China Southern raising commitments of $6.6bn (£3.28bn). The funds will be invested in the global equity markets through a variety of investment instruments, such as exchange-traded funds. The investment focus will be on five mature financial markets and five emerging markets, including Russia, India, Brazil, Malaysia and South Korea.

China Southern is a new client for Cadwalader, which was the only adviser involved in the transaction. The fund managers approached the firm after work it had done advising Hua An Fund Management on a pilot QDII scheme launched by the CSRC in November 2006.

Duncan said: "This is a significant deal which opens up a whole new market for foreign structured funds to be sold into China. It signifies the potential opening of a massive new team of investment."

China Southern is the first applicant to win regulatory approval to invest under the new regulations, although many other investors are also expected to take advantage of the new rules.