Hong Kong’s latest tax incentives are expected to lure large numbers of investment houses from the mainland to raise their first offshore private equity funds in the city to compete with big international names such as Blackstone and TPG, in a reversal of previous trends.

Just a few years ago, global private equity firms were heading to the mainland to raise yuan funds, as Beijing pledged to open up its financial services sector further to foreign investors. Many, however, eventually backed out in the face of myriad difficulties, including technical and tax concerns.