Banyan Tree holds first closing for RMB 2bn China fund

Singapore-listed development and fund management firm Banyan Tree has raised RMB 953 million for its first China hospitality and resorts fund. The firm aims to hold a final closing for the six-year vehicle in January.

Banyan Tree Holdings, the Singapore-listed hospitality and leisure development and fund management business, has held a first closing for its first Renminbi-denominated fund.

The firm has raised RMB 953 million (€101 million; $141 million) for its Banyan Tree China Hospitality Fund, a vehicle which aims to make investments in Chinese companies that will undertake hospitality projects to be branded with the Banyan Tree name.

Zhang Li, managing director at Banyan Tree’s Hong Kong office, told PERE the fund was already effectively pre-seeded with four projects where the development land has already been acquired by the firm or in the process of being acquired.

He said: “As the Chinese economy expands fast, a lot of people want to spend more and more money on upgrading their living standards including things like taking more vacations. So naturally there’s a huge demand for high-end resorts.”

Zhang added that the fund was in line with government strategy. He said: “We’ll go to second, third or even forth tier cities, to iconic tourist destinations. By building great resorts we will help generate employment, tax revenues and increase the popularity of the local communities.”

Banyan Tree ultimately wants to attract up to RMB 2 billion from an investor pool of Chinese high net worth investors and institutions ahead of a final closing for the fund expected in January. The firm is working with a local private placement agent which specialises in raising capital from successful Chinese entrepreneurs.

The six-year fund has the possibility of being extended by two further years and will seek leverage at the project level if necessary.

The fund is Banyan Tree’s first Renminbi-denominated fund. Traditionally, the firm has raised US dollar-denominated-vehicles. For example, its last fund closing was $283 million for its Banyan Tree Indochina Hospitality Fund last July. That vehicle was also predominantly pre-seeded with much of the equity being invested into a large resort in Vietnam called Laguna Hue.