Savills Forms Fund JV with China Minsheng Investment

Savills Investment Management has announced a joint venture with a Chinese private equity firm to invest in real estate opportunities in the UK, Europe and around the world.

The agreement between the UK-based investment house and China Minsheng Investment Capital is kicking off with a total of £50 million in investment by the Chinese company into projects in the UK market.

As China continues to allow more capital to flow into overseas real estate markets, fund managers in the US, UK and elsewhere have been competing to harness more of these mainland funds. The tie-up between Savills Investment Management and China Minsheng appears to be one of the first significant joint ventures in this area, and is being treated as a major coup by the UK firm.

Investing into London Residential Markets

The first major initiative resulting from the joint venture is a new real estate fund, CMISIM European Investment Fund, in which CMIC is the cornerstone investor with seed capital up to £30 million. The fund aims to deliver a net return to investors of 15 per cent.

The majority of China Minsheng’s investment into CMISIM European Investment Fund is earmarked for Savills Investment Management’s existing Prime London Residential Development Fund II (PLRDF II). The UK firm says that the remainder of the funds will be used to invest in other UK projects.

Justin O’Connor, Chief Executive Officer of Savills Investment Management noted that, “We are delighted to have formed this ground-breaking joint venture with CMIC, and together we look forward to generating many highly attractive real estate investment opportunities in the years to come.”

The joint venture also hopes to raise additional capital from China and other locations, with which it would expand its investment into other markets in Europe, and around the world.

Savills’ PLRDF II fund was launched in 2014 to capitalise on opportunities in the London residential development market, and China Minsheng will invest an additional £20 million directly into the fund as a limited partner.

A New Chinese Firm with an Established Taste for UK Real Estate

In China Minsheng, Savills has found a partner with a taste for London real estate and a proven interest in investing overseas.

Terry Liu, Chief Executive Officer of China Minsheng Investment Capital, commented on the joint venture deal by saying, “Our joint venture partnership with Savills Investment Management represents an important step in establishing a global real estate investment platform. Given the strategic importance of London and its buoyant real estate market, we are pleased that this will be the initial investment focus of our partnership.”

In February this year, an $8 billion Chinese investment fund managed by China Minsheng invested in a £1 billion ($1.5 billion) business park project being developed in eastern London by a Chinese developer.

China Minsheng Capital, which was founded last year by the former chairman of China’s party-related Minsheng Bank, joined with Beijing’s Advanced Business Park for that London project to develop a mixed-used centre for Asian companies on the site of the Royal Albert Docks.

The east London business park was the first overseas investment for China Minsheng Capital, but the Chinese fund manager has since indicated its interest in more cross-border opportunities.