China’s DNE Group Closes on $491M for RMB Industrial Fund

Shanghai-based DNE Group announced on Friday that it has reached a final close on RMB 3.5 billion ($490.5 million) in capital for its latest renminbi fund, targeting investments in logistics, manufacturing parks and other industrial facilities in China’s key gateway cities.

The industrial developer and fund manager said it received strong support for the fund from several leading renminbi investors, which it attributed to their confidence in the long-term potential of infrastructure accommodating the tech-driven elements of China’s economy.

“The establishment of this new fund marks another important milestone for DNE,” said Sun Dongping, chairman and chief executive officer of the Warburg Pincus-backed firm. “Despite the evolving global economic landscape, the fundamentals of China’s new economy infrastructure remain solid.’

The closing of this latest vehicle brings DNE’s total fundraising for its renminbi strategies to nearly RMB 5 billion so far this year, per the statement, with the company having also recently received regulatory approval for the expansion of DNE New Economy C-REIT, a Shanghai-listed real estate investment trust which it brought to an IPO in 2022.

Aiming for Stability

DNE did not provide specifics regarding target acquisitions for the fund, but said that the portfolio will focus on capturing infrastructure demand driven by e-commerce, intelligent manufacturing and supply chain upgrades, with the aim of delivering stable and sustainable returns for investors.

“Leveraging our deep local insights and comprehensive asset management capabilities, we will continue to capture market opportunities, optimize our portfolio, and deliver on our commitment to creating long-term value for our investors while supporting the transformation and upgrading of China’s economy,” Sun said. 

DNE has previously partnered with a range of international and domestic investors to develop industrial properties in China, including setting up a $250 million venture with Bain Capital in October 2023 to develop and operate manufacturing parks in the country.

Earlier that same year the company established a $485 million life science fund to invest in an R&D facility in Shanghai’s Pudong district, with insurer AIA among the backers for that venture. 

In February of 2023 DNE established a RMB 6 billion income fund to invest in completed industrial facilities and development projects across China which was subscribed by Chinese institutional investors. 

Competitor GLP has also successfully recruited domestic backers for long-term funds backed by assets from its balance sheet and from other ventures, with the industrial specialist announcing the RMB 2 billion closing of its fourteenth China income fund earlier this month. 

REITs on the Rise

With the share price of its Shanghai-listed REIT having risen 18.5 percent over the past 12 months, DNE said it plans to issue new units in the trust by the end of this year. 

“Looking ahead, DNE will continue to strengthen its competitive advantages in new economy infrastructure through disciplined investment, strong operational management, and innovative capital solutions, further consolidating its market leadership and contributing to the sustainable, high-quality growth of China’s new economy,” DNE’s Sun said.

The initial RMB 1.38 billion portfolio for DNE New Economy C-REIT included four industrial parks spanning 284,000 square metres (3 million square feet) in the cities of Shanghai, Kunshan, Wuxi, and Changzhou. 

China’s REIT market has gathered momentum in recent months with Singapore’s CapitaLand raising RMB 2.29 billion from the Shanghai IPO of a retail mall REIT earlier this month. 

In July, mainland data centre platform GDS Holdings raised RMB 2.4 billion from the market debut of its China REIT on the Shanghai exchange.