China wealth fund backs TPG lender as part of US property push

BEIJING (BLOOMBERG) - China Investment Corp, the sovereign wealth fund that controls US$814 billion (S$1.1 billion) in assets, is betting on US real estate by investing in a commercial real estate lender formed by the money management firm TPG.

In conjunction with last week's initial public offering of TPG RE Finance Trust, CIC disclosed in a US regulatory filing that it holds about a 15.5 per cent stake in the lender through affiliate Flourish Investment Corp.

CIC, which ranks as one of the world's largest state-owned investment firms, is boosting its holdings in alternative assets such as private equity and real estate. The wealth fund accelerated that initiative last month with a US$13.8 billion deal to acquire Logicor, a European logistics property company that owns warehouses in countries such as France and Germany, from Blackstone Group.

The fund, whose overseas investments returned 6.2 per cent last year, has more than a third of its portfolio in alternative assets, according to its latest annual report. A CIC spokesman could not be reached for comment.

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TPG, founded in 1992 by David Bonderman and Jim Coulter as a private equity firm, has branched into other asset classes, including credit, real estate, hedge funds and financing for early-stage companies. The firm oversees about US$73 billion, according to its website.

The New York-based TPG originates and acquires mortgages for commercial properties including offices, hotels and apartment buildings. As of March 31, the real estate investment trust held 54 first mortgage loans with a total unpaid balance of US$2.6 billion, as well as mezzanine loans and mortgage backed securities.  The Reit started in December 2014 with about US$714 million of equity commitments from seven outside investors, "many of which have significant investments relationships with TPG", according to a July 21 prospectus filed with the US Securities and Exchange Commission.

The lender issued additional equity through its IPO, selling some 11 million shares at US$20 each for a total of about US$220 million.

CIC's Flourish affiliate held the equivalent of 9.39 million TPG common shares at the time of the IPO, according to filings. Another major Asian investor, closely held Nan Shan Life Insurance, held 3.38 million shares, a 5.6 per cent stake. Both figures include their respective portions of a stock dividend that TPG declared this month, prior to the stock sale.

Mr Jason Chudoba, a spokesman for TPG, had no immediate comment. Ms Sara Ho, an assistant vice-president in Nan Shan's finance and accounting department, declined to comment through an e-mail.