Warburg Pincus Investing Up to $413M into Hong Kong’s Weave Co-Living

US private equity firm Warburg Pincus on Monday announced that it is investing up to $413.5 million into Weave Co-living, and has launched the partnership with a $181 million bet on the sharing economy startup.

The partnership with Weave is the first time that the firm, which manages more than $47 billion in private equity assets worldwide, has invested into an Asia rental accommodation platform outside of mainland China.

The investment by Warburg Pincus will support a plan by Weave, a co-living provider established last year by former APG real estate head Sachin Doshi, to grow its portfolio to over 10,000 bedrooms across major Asian cities over the next five years.

Investment Follows Debut of Kowloon Project

The investment by Warburg Pincus was announced just three months after Weave opened its first location next to Kowloon’s Prince Edward MTR station in August of this year.

That 160 bedroom facility is now 95 percent occupied and the company says that it received close to 1,000 applications for accommodation in its debut project.

“This partnership builds upon our established investments in the multi-family sector in mainland China and we continue to be attracted to the significant market potential of the sector across key gateway cities in Asia Pacific underpinned by strong demand for good quality rental accommodation options,” said Joseph Gagnon, Managing Director and Head of Asia Real Estate for Warburg Pincus.

According to the announcement, Warburg Pincus has invested $181 million into the one-year-old startup, while the American private equity also said that there is option to invest up to $413.5 million into Weave, while no timeline has been revealed for future financing.

All the Perks With Less Pain

According to its founder, Weave’s success to date is a result of economic realities and cultural changes.

“There is a fundamental shift in the way young people want to live, interact and experience a more fulfilling lifestyle,” Doshi said in a statement. “With serious affordability constraints and limited supply of quality rental apartments across many gateway cities in the region, collaborative living is an innovative, hassle-free way of urban living with all the perks and none of the pain points of traditional accommodation models – all at a value-for-money price.”

Formerly the head of private real estate at APG Management, the deal looks like an endorsement of Doshi’s decision to set off on his own after more than six years with the Dutch pension fund manager.

Doshi founded real estate private equity firm Emerald Lake last year and raised $60 million to get Weave started, including acquiring 36 Boundary Street in Kowloon, a 13-storey hotel which it transformed into the co-living facility.

According to the company’s website, Weave on Boundary has 160 bedrooms with over 6,000 square feet of co-living space, including a communal kitchen, a living room, movie room, gym, laundry facilities, a game room, and a rooftop terrace with a mountain view.

The shared-living centre offers rooms ranging from 100 square feet to 130 square feet, with monthly rents starting at HK$6,900, including Internet and utilities. Doshi said its target customers including millennials and young professionals working in Hong Kong who require a high standard accommodation but struggle to afford their own independent apartment.

Warburg Pincus Doubles Down on Asia’s Multi-Family Sector

The tie-up with Weave is Warburg Pincus’ first foray into rental housing in Asia outside of mainland China, where it has co-founded and backed a number of apartment startups in the last three years.

In January of this year the New York-based firm joined with Tencent and venture capital heavyweight Sequoia China to lead a RMB 4 billion investment into Ziroom, one of the biggest rental apartment brands in China.

That bet on Ziroom came after Warburg Pincus teamed up with China’s Avic Trust in 2016 to invest $300 million into Shanghai-based Mofang Apartment, which operates rental homes aimed at “white-collar” residents across the country.

In 2015, the US private equity firm co-founded mainland rental apartment operator Nova, a residential rental platform which it committed $183 million in new cash into in September of 2017.