In a case of “I’ll scratch your back if you scratch my back”, Australia’s Macquarie Capital is partnering with China Jinmao to launch a real estate investment platform. The proposed investment vehicle would provide Macquarie with access to mainland investors, while giving the Chinese developer a steady pipeline of overseas investment opportunities to wave in front of hungry investors.
The new platform, dubbed JM Capital, will invest in various real estate opportunities, including residential and commercial properties, both in China and internationally.
One of the real estate arms of the state-owned Sinochem Group, China Jinmao could use the platform to invest outside of mainland China for the first time. Formerly known as Franshion Properties, the company changed its name to China Jinmao Holdings Group,just over one year ago.
In setting up the investment platform, China Jinmao is following a similar move made by China Vanke earlier this year. The country’s largest developer by sales set up a US-based, globally focused real estate investment platform in June. The homebuilder joined up with a team of real estate professionals from Rockefeller Group Investment Management and Metropolitan Real Estate to form Brightstone Capital Partners.
Macquarie Continues To Maneuver Into China
While certainly no strangers to the China market, Macquarie has been deliberate and a partnership with China Jinmao would be its second investment fund with a state-owned enterprise.
The Australian bank teamed with a wholly owned subsidiary of China Everbright to form a $729 million investment fund in 2011 that focused on financing infrastructure projects in greater China. At the time, it was seen as a way for Macquarie to gain a foothold on the mainland.
“This could be a savvy move by Macquarie and China Everbright. On the surface of it, a minority stake in a local Chinese hydro plant or toll road may not look like a super-smart investment – but if you’re putting yourself in a position where you can snap it up for a song at some point, and you’re smart about which assets you choose, you’re going to be in the money,” a Sydney-based fund manager who did not want to be named told the Financial Times.
This year the firm stepped up its investments in China partnering with Canada’s Ivanhoe Cambridge to bid for Logos Property Group, a warehouse builder with sheds spanning China and Australia. Logos portfolio of assets across the two countries was valued at A$2 billion ($1.4 billion) at the time of bidding. That came a year after Macquarie assisted Logos in forming a $400 million China joint venture with Ivanhoe and CBRE Global Investment Partners.
Chinese Developers Head Down Under En Masse
While there is no guarantee that the new real estate investment platform will make Australian acquisitions, should Macquarie and China Jinmao decide to target the former’s home turf, the latter would join a growing number of Chinese developers to have invested down under in recent times.
On the residential front, Aoyuan Property Group acquired two sites in Sydney for A$55 million ($42.1 million) earlier this month while Country Garden scooped up a Sydney site for $34.5 million in August.
Meanwhile in the office sector, Shanghai-listed Poly Real Estate’s Australian arm purchased a pair of buildings near Sydney’s Circular Quay for A$160 million ($121.6 million) with plans to develop them into a new A-grade office tower in June.