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The Citic Capital China Real Estate Investment Fund III received capital commitments from institutional investors from Europe, US, Middle East and Japan as well as seed money from Citic Capital.
This latest fund raising reflects what appears to be a growing appetite for either private equity portfolios, real estate investments or exposure in the mainland among investors looking for places to park their excess cash during these turbulent times in financial markets globally. Firms such as Citic Capital are hoping to take advantage of the attractive valuations in the market as they look for potential investments.
The fund invests in project developments, acquisitions and entity level investments in Chinese real estate companies.
The fund focuses on development projects in the first- and second-tier cities in affluent regions including the Pearl River Delta, Yangtze River Delta, Pan Bohai Gulf Region and other major cities such as Chengdu, Wuhan and Chongqing.
The fund also invests in commercial properties, with a special focus on value-adding opportunities for distressed properties. In addition, this fund will look for entity level investments in leading local developers with a strategic view.
ôSupported by a track record of two previously launched real estate funds that focus on real estate investments in China, our third fund had obtained good response from global institutional investors despite a very difficult fund raising environment,ö says Zhang Yichen, CEO of Citic Capital, who noted expectations of ôsubstantial competition in the real estate investment spaceö.
Stanley Ching, managing director and head of Citic CapitalÆs real estate arm, believes the fundÆs general medium-term capital appreciation strategy is most suitable to match cyclical market movements. He also said that the fundÆs broad strategy of focusing on property development, property acquisition and entity level investment is best designed to take advantage of numerous market opportunities and synergies from other Citic entities.
Founded in 2002, Citic Capital manages more than $1.6 billion in capital from a diverse base of institutional investors globally. The company is part of Citic Group, one of China's largest and most comprehensive conglomerates focusing on financial services.
Indeed, competition property investments in Asia, which are considered attractive at current valuation levels, have been heating up.
Among the property funds out there at the moment are Merrill LynchÆs Asian Real Estate Opportunity Fund, which raised $2.65 billion from global investors including pension funds, endowments, foundations and high-net-worth individuals in October last year. It is MerrillÆs first real estate fund that specialises in the Asian market exclusively. The fund focuses mainly on Japan, South Korea, India and China, with a secondary focus on Australia and Southeast Asia.
Another is ING Real Estate Select Asia-Pacific Property Growth Fund, which aims to raise $250 million this quarter and a total fund size of $675 million by the time it closes. The fund will invest in closed-end property funds. They will mainly comprise of opportunistic property funds, either country or sector specific.
Among those competing in the wider private equity arena sector-wise is the $1.2 billion Asia Opportunity Fund III managed by CCMP Capital Asia, which will be renamed Unitas Capital at the end of this month.
For its third buyout fund since 1999, CCMP Capital Asia plans to stick with its investment strategy of acquiring controlling stakes in mid to large market leading companies in Asia-Pacific, with an emphasis on the consumer, retail, industrial manufacturing and services sectors.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
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