Bridge Capital eyes $200m maiden outbound fund

The Shanghai-based firm is plotting to launch its first US-focused property fund by the beginning of next year for its Chinese investors.

Shanghai-based property fund manager Bridge Capital is eyeing the launch of its first investment vehicle targeting US properties for Chinese investors by the beginning of next year, according to David Chen, the firm’s executive director of the board.

The details of the fund are still being discussed internally and with investors but it is expected to be open-ended in structure with the first returns distributed to investors within five years of raising the initial capital.

Chen told PERE that the firm could target anywhere between $100 million and $200 million of capital in the first instance. The fund would be primarily offered to Bridge’s existing investors, from whom Chen said the firm could likely raise that capital within three months altogether.

The vehicle would be focused on US developments, primarily small-scale office and residential projects. Bridge Capital would invest in the projects alongside “seasoned” developers that have shown success in acquiring land, getting the needed development permissions and selling the final product, Chen said. Investments would likely be between $10 million and $15 million in value.

He added that the firm already had shortlisted its first, potential development partners.

The firm is targeting returns of between 20 percent and 30 percent for its investors from the vehicle.

Bridge Capital already has a sizable rolodex of investors within China for three existing RMB-denominated vehicles, called GEM funds. Each of those funds were raised for specific developments. The last of them was for a mixed-use development close to Beijing for which Bridge Capital raised RMB1 billion (€119 million; $161 million).

“This same group of investors is realizing that their outbound real estate investment needs to pick up speed,” Chen said, adding that Bridge Capital’s investors would market the developments to Chinese end-users.

Bridge Capital is the most recent Chinese investor to look to US properties as a means of diversifying its asset base. Chinese outbound capital into international real estate markets totaled $7.5 billion in 2013, twice the amount invested overseas in 2012, according to Chinese data service Mingtiandi.