China’s CITIC Capital has held the final close of an RMB-denominated fund at 2.625 billion yuan ($408.2 million) in partnership with SCPG, to invest in the country’s Tier I and Tier II cities.
SCPG is a firm that develops shopping centres and is affiliated with the Chinese real estate giant Vanke.
The new fund, dubbed Vanke SCPG & CITIC Capital Retail Fund, will focus on investment opportunities in retail-focused commercial real estate projects that “have upside potential after upgrade or renovation,” said CITIC Capital in a statement on Wednesday.
As its first retail-focused RMB fund, CITIC Capital will be the fund manager in charge of fund investments and management. SCPG, which currently runs over 100 shopping centres across more than 50 cities in China, will serve as a co-general partner (co-GP) to leverage its strengths in project reconstruction, asset enhancement, portfolio management and operation.
Limited partners (LPs) of the fund are largely domestic insurance companies in China. CITIC Capital and SCPG also injected capital out of their own pocket, according to the statement.
The fund has made three investments so far into shopping malls in the capital city of Beijing, eastern China’s Jinan, and Chengdu in the country’s southwestern area, respectively. Their gross floor area amounted to about 410,000 square metres (approximately 4.4 million square feet).
China’s key first- and second-tier cities have witnessed consumption growth in recent years. But comparing to markets in developed countries, its retail space per capita and number of shopping centres are still insufficient, said CITIC Capital.
Amid the rapid expansion of new-generation shopping centres, which emphasise precise positioning and consumer experience, the firm said that it is looking to capitalise on the robust consumption demand in cities like Beijing and Shanghai, and other drastically-growing retail markets in key cities across the nation.
Founded in 2002, CITIC Capital is an alternative investment and advisory firm managing $16 billion for a diverse range of institutional investors worldwide. Its major businesses include private equity (PE), real estate, structured investment and finance, special situations, and asset management. It has over 280 employees across offices in Hong Kong, Shanghai, Beijing, Shenzhen, Tokyo, and New York.
CITIC Capital Real Estate Group (CCREG), the firm’s real estate department that started operations in 2005, has built a portfolio of retail, office, industrial, and residential properties in China and Europe. To date, the real estate arm has managed 13 funds in total.