Aetos, China Life team up for property venture

The investment management firm has teamed with China’s biggest insurer and largest institutional investor to search for opportunities in China’s real estate sector.

China Life Asset Management and Aetos Capital have formed a strategic partnership to identify and evaluate real estate investment opportunities throughout China. The joint venture will focus on a wide range of asset types including office, residential, industrial, retail, hotel, and mixed-use properties, as well as well-located land with potential for future development.

Founded in 1999, Aetos Capital is an independent real estate investment management firm which manages two real estate private equity funds – Aetos Capital Asia and Aetos Capital Asia II. The firm closed its first opportunity fund in November 2003 on $740 million (€570 million) and its second fun two years later on $2.2 billion. Aetos has approximately $3 billion of equity commitments, mostly in Japan, and has only recently begun to look at China. Its first fund invested heavily in residential assets in greater Tokyo, while its second fund has a much higher concentration in office properties, focusing in the greater Osaka region.

Aetos’ funds are dedicated to making investments in real estate assets and companies, primarily in Asia. To date, the funds have made investments with a value of more than $5 billion. Aetos Capital’s affiliated company, AEA Investors, offers private equity investment opportunities. Aetos and its affiliates have offices in New York, Hong Kong, Tokyo, Osaka, London and Menlo Park and have $10 billion of assets under management.

A source at the firm recently told The Wall Street Journal that it plans to commit $1 billion to China over the next few years. In May the firm hired a ten-year veteran of Morgan Stanley, Kenny Tse, to lead the alternative investment firm’s push into Chinese real estate.

China Life Asset Management is the largest institutional investor in the Mainland Chinese capital market, and is a division of China Life Insurance Group, China’s biggest insurer. As of May 2007 its assets under management exceeded 900 billion Renminbi ($117 billion).