Singapore-listed property group CapitaLand Limited announced on Tuesday that it raised US$1.5 billion (S$2 billion) for its third private investment vehicle in China.
The fund – Raffles City China Investment Partners III (RCCIP III) – with a life of eight years, will invest in integrated developments, and is the largest private capital raise that the property group has undertaken to date. CapitaLand said RCCIP III was first in many steps towards raising much larger funds with a total AUM of up to S$10 billion by 2020.
The Singapore-based property group will subscribe 41.7 per cent stake in RCCIP III, and the remaining will be held by investors from Asia, North America, and the Middle East.
Among its leading investors in RCCIP III are Canada Pension Plan Investment Board (CPPIB), which has committed up to US$375 million in the vehicle, representing a 25 per cent stake.
This latest investment by CPPIB follows its announcement that it had agreed to invest US$146 million into a joint venture (JV) with China’s Longfor Properties Co. Ltd. to develop the Chongqing West Paradise Walk shopping center.
Both its existing and new investors have subscribed to this vehicle, that will be managed by CapitaLand Fund Management Pte. Ltd. an indirect wholly owned subsidiary of CapitaLand, the company added.
According to the recent 2016 Fund Manager Survey, jointly conducted by the Asian Association for Investors in Non-Listed Real Estate Vehicles Limited, the European Association for Investors in Non-Listed Real Estate Vehicles and the National Council of Real Estate Investment Fiduciaries in the United States, CapitaLand is reportedly the largest fund manager in the Asia Pacific and ranked No.11 globally. This is based on total real estate assets under management (AUM) it managed in 2015.
As part of its Raffles City China strategy, CapitaLand also manages a US$1.18 billion Raffles City China Fund that is invested in five Raffles City developments in China: Raffles City Shanghai, Raffles City Beijing, Raffles City Chengdu, Raffles City Ningbo and Raffles City Hangzhou. In addition, there is a an S$1.03 billion vehicle in a Raffles City project in Changning district in Shanghai.
The Group Chief Financial Officer of CapitaLand Limited, Arthur Lang, will oversee the third vehicle. To date, the realty firm manages 16 real estate private platforms and five real estate investment trusts with assets under management worth over S$45 billion.
Lim Ming Yan, President & Group CEO of CapitaLand Limited, said real estate remains a capital intensive business, and pointed out that private equity was central to the active capital management strategy of the company, for it to be dominant player in this space.
“As real estate capital values rise with the growing intensity of competition for assets, institutional investors are attracted to CapitaLand….This, together with our ability to co-invest with our capital partners, aligns us with reputable investors with longer investment horizons such as sovereign wealth funds, pension funds and insurance companies,” he said.
According to a Lucas Loh, CEO of CapitaLand China, the Chinese market represents robust long-term investment potential, with continued demand for property riding on the back of urbanisation, economic growth, the rise of the services sector, a growing middle class, and rising domestic consumption.
Notably, these socioeconomic themes feature prominently in gateway Chinese cities where growth trajectories remains robust, suggesting opportunities for integrated developments around key transportation hubs.
CPPIB’s MD and head of Asia investments, Jimmy Phua said: “Investing in CapitaLand’s new China investment vehicle gives CPPIB the opportunity to expand on our long-term strategy of investing in high-quality commercial real estate in China to deliver solid risk-adjusted returns over the long term. We are very pleased to extend our partnership with CapitaLand, one of our longest standing real estate partners in Asia, and one of the most highly regarded real estate companies in the region.”