CapitaLand sets up $2b investment fund, its third and biggest for China projects

Raffles City Hangzhou, one of five Raffles City developments in China under the earlier US$1.18b Raffles City China fund. The integrated development is due to open in 2017.
Raffles City Hangzhou, one of five Raffles City developments in China under the earlier US$1.18b Raffles City China fund. The integrated development is due to open in 2017.PHOTO: CAPITALAND

SINGAPORE - CapitaLand has set up a US$1.5 billion (about S$2 billion) fund to invest in prime integrated developments in gateway cities in China, it announced on Tuesday (Oct 25).

The Raffles City China Investment Partners III (RCCIP III), which has a life of eight years, is the company's largest private capital raise.

CapitaLand also manages a US$1.18 billion Raffles City China Fund that has invested in five developments in China (Raffles City Shanghai, Raffles City Beijing, Raffles City Chengdu, Raffles City Ningbo and Raffles City Hangzhou), and a S$1.03 billion vehicle in a Raffles City project in Changning district in Shanghai.

CapitaLand said it will subscribe for a 41.7 per cent sponsor stake in RCCIP III, while the remaining interests will be held by major investors from Asia, North America, and the Middle East, including new and existing investors.

Separately, Canada Pension Plan Investment Board (CPPIB) announced on Tuesday an investment of US$375 million in RCCIP III, equivalent to a 25 per xent stake in the investment vehicle.

Mr Jimmy Phua, CPPIB managing director, head of real estate investments - Asia, 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."

RCCIP III will be managed by CapitaLand Fund Management Pte Ltd, an indirect wholly owned subsidiary of CapitaLand.

Said Mr Lim Ming Yan,company president & group CEO: "CapitaLand's strong developer-owner-operator capabilities will enable us to deliver better risk-adjusted returns for investors. 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."

Mr Lim noted that the investment platforms enhance the group's returns on equity with fee income. In 2015, CapitaLand derived S$202.1 million of fees from non-listed real estate and Reit management activities, about 4 per cent of the group revenue, he said.

Mr Arthur Lang, group chief financial officer who also oversees the investment management business said that RCCIP III, CapitaLand now manages 16 real estate private platforms and five real estate investment trusts with assets under management (AUM) worth over S$45 billion.

"RCCIP III brings us closer towards our goal of raising funds with a total AUM of up to S$10 billion by 2020," he added.