The overseas acquisitions of China’s most adventurous real estate developer seem to be paying off as Greenland Holdings recently raised RMB 11.73 billion (US$1.93 billion) from five domestic investors.
The share sale to a group of domestic Chinese investment funds may be driven in part by Greenland’s more than US$10 billion in overseas development projects that the Shanghai-based conglomerate has taken on in the last few years.
5 Investment Funds Buy into Greenland
According to an account in the Wall Street Journal, the firms subscribing to the share sale included Ping An Innovation Capital Investment Co., a subsidiary of CDH Investments, Ningbo Huisheng Fund, Zhuhai Puluo Fund and a Shanghai-based subsidiary of the State Development and Investment Corporation (SDIC) Fund Management.
The two biggest subscibers were Ping An, which invested RMB 5.83 billion for 1.037 billion shares and CDH which paid RMB 2.5 billion for 444 million shares.
Funding for More Acquisitions?
While state-owned Greenland did not go into specifics about the goals of this latest share sale, the company has been aggressive in acquiring overseas development projects this year, and is most likely encouraged by the warm reception that its recently launched Sydney project has received from buyers.
During 2013 Greenland committed to several billion dollars in new development projects globally, including taking over projects in Los Angeles, New York, Sydney and Melbourne. The highest-profile of these was the group’s acquisition of the $4 billion Atlantic Yards project in Brooklyn during November
According to the company, its Sydney project, which it acquired in March 2013, sold out more than 90 percent of the space made available when it launched its marketing campaign during November.
In addition to its overseas investments, Greenland has also been active acquiring land for new projects in China, most recently the developer purchased a site in downtown Shanghai during December for RMB 5.95 billion (US$979 million).
Insurance Firms Continue to Invest in Real Estate
The decision by the Ping An fund to invest in Greenland is part of a trend towards property investment by China’s insurance companies. Shenzhen Ping’an Innovation Capital Investment Co., Ltd. is a principal investment arm of China Ping An Trust Company Limited, and part of the Ping An Group, which is one of the country’s five largest insurers.
Spurred by relaxation of restrictions on property investment, China’s insurers have steadily acquiring more real estate assets both at home and internationally, including Ping An buying the Lloyd’s of London building in the for UK $388 million during July, China Life Insurance buying the 5 Corporate Avenue building for RMB 3.32 billion (US$545 million) in December, and Sunshine Life Insurance buying Corporate Avenue 2 in Chongqing for RMB 2.4 billion (US$393 million) also last month.
While Ping An’s latest investment is in a property company rather than a direct acquisition of assets, it nonetheless demonstrates the ongoing attraction of the real estate industry to insurers looking for sustained rates of return.
Overseas Revenues Expected to Expand
According to statements in December, Greenland expects its international projects to contribute a growing portion of its revenues. At the time, the developer predicted that it would bring in RMB 2.5 billion internationally during 2013 and more than RMB 10 billion during 2014.