Sun Hung Kai and Company is aiming to raise between $200 million and $300 million for a just-launched real estate debt fund as it expands its investment management business regionally.
Co-founded by the patriarch of Hong Kong’s Sun Hung Kai Properties but under separate ownership for decades, Sun Hung Kai & Co is committing $100 million from its own balance sheet to kick off the fund, the HKEX-listed firm said in a Thursday press release.
The vehicle, which is led by portfolio managers Simon Tozer in Melbourne and Rai Katimansah in Singapore, aims to invest in first and second mortgages for commercial and residential real estate in Asia-Pacific over its five-year life.
“We see compelling investment opportunities to make attractive risk-adjusted returns by extending loans to well-established borrowers across APAC markets where MCIP and SHK & Co have strong deal sourcing networks and execution capabilities,” Tozer and Katimansah said in a statement.
Like to Loan
The launch of the venture, which focuses on opportunities in Australia, New Zealand, Greater China, South Korea and Southeast Asia, represents a significant expansion of SHK & Co’s fund management business, which had HK$2.6 billion ($334.5 million) under management in its real asset portfolio at the end of 2020.
Multiple Capital Investment Partners, a recently formed unit of the company, will manage the fund, which focuses on mortgage loans for development, repositioning or refinancing of properties.
In addition to its Asia Pacific territory, the group said it would also consider deals in the UK and select EU countries for its new debt fund on an opportunistic basis.
“Credit, including real estate lending, is a core business and competency of SHK & Co,” said Seng Huang Lee, the group’s executive chairman and a member of the investment committee of MCIP. “We are excited to bring together the infrastructure and transparency of a listed company, the commitment and consistency of a family business and the experienced professionals in the MCIP team. This combination will offer an institutional quality product right from the start.”
In 2020, SHK & Co brought in HK$303.5 million through its Sun Hung Kai Credit Ltd division, which provides mortgage loans in Hong Kong. That figure was up from the HK$295.6 million the business brought in during 2019, and earned a pre-tax profit of HK$112.7 million.
The company also owns a majority stake in United Asia Finance Ltd, a lender that offers unsecured loans to individuals and small businesses in Hong Kong and mainland China. That business brought in HK$3.3 billion last year.
Managing External Capital
While SHK & Co set up an investment management division six years ago, the group decided in 2019 to set up an alternative fund management platform to attract external capital, with that division being established last year.
MCIP’s strategy is to take advantage of Asia’s secular growth trends while securing downside protection and generating yield, aiming to provide investors carefully risk-managed access to the region’s real estate markets.
Tozer is chief executive of Melbourne-based financial services firm Multiple Capital, a specialist in the debt funding market. Multiple Capital and SHK & Co are sister companies that joined forces to create MCIP, Tozer told Mingtiandi, with SHK’s most recent annual report showing that it owned 100 percent of the equity in MCIP units domiciled in Australia, Singapore and the Cayman Islands.
Earlier, Tozer worked as an executive director at ABN AMRO Bank in Melbourne and London for 10 years and as managing director at Nomura Securities in Melbourne for five years. He has a bachelor’s degree in economics and finance from Monash University and an MBA from the University of Melbourne.
Katimansah joined MCIP in October 2019, and his most recent previous post was at Singapore-based private equity firm Phoenix Property Investors, where he spent six years as head of Asia Pacific debt investments.
Before joining SHK’s effort, Katimansah’s experience included stints as managing director at both Wells Fargo in Hong Kong and Standard Chartered in Singapore, as well as an earlier tenure as senior vice president and head of financial products at Singapore’s Mapletree Investments. He has a bachelor’s degree in architecture and urban planning from Cornell University and a master’s degree in urban planning from the University of Pennsylvania.
SHK & Co launched a number of new initiatives under its funds management platform in the first quarter of this year. Aside from the $100 million seeding for the real estate debt fund, the group’s commitments so far include $150 million for Hong Kong financial services firm East Point Asset Management, $15 million for tech venture capital firm E15VC and an undisclosed amount for ActusRayPartners European Alpha Fund, which has a fundraising target of $100 million.
After predicting in its 2019 annual report that the investment management business would be a major driver of future growth, the group appointed Lindsay Wright as chief executive of the funds management business last July. Wright’s experience includes executive roles at Deutsche Asset Management, Invesco, BNY Mellon and most recently Matthews Asia.
She has a bachelor’s degree in accounting and finance from the University of Auckland and serves as an independent director on the board of New Zealand’s stock exchange.