Singapore’s CapitaLand Investment will boost its exposure to India and credit as it continues to grow its fund management business.
In addition to the launch of an Indian business park development fund announced last week, the real estate firm plans to scale up a credit program in Australia this calendar year, according to its H1 financial results briefing on Friday. While the manager has not disclosed the details of the credit program, CLI has raised S$368 million ($272 million; €248 million) for the fund, CapitaLand India Growth Fund 2, which has a S$525 million target. CIGF 2 is CLI’s second business park development fund in India, following the closing of its S$300 million Ascendas India Growth Program in 2015.
Andrew Lim, group chief operating officer at CLI, said India is receiving “unprecedented attention” from investors as the recovery in China is slower than expected. “India is exciting for us. It is still a small piece of the puzzle,” Lim said. “But India is a whole market, and it will play an increasing role in how we diversify our business.”
Currently, CLI has S$4 billion of real estate AUM in India, representing 3 percent of its S$134 billion real estate AUM. Apart from the two business park funds, the firm also has two logistics private funds in the country: the Ascendas India Logistics Program and CapitaLand India Logistics Fund II. Both funds are S$400 million in size.
Apart from India, credit is another area in which the firm sees growth in a higher interest rate environment. “We really want to grow the credit business,” said Lee Chee Koon, group chief executive officer at CLI. He pointed out that banks’ gradual withdrawal from the credit space has limited the financing options in many developed markets. “I think that provides a very interesting window for us to really build the credit business. We have credit teams in Australia, Hong Kong, China and India. We are looking to really do a pan-Asia platform during the next few years,” Lee said.
While India and credit will be the two major focuses for the firm’s private funds business, CLI remains “cautiously optimistic” about China. The country represents the biggest share of the firm’s real estate AUM, accounting for over S$47 billion, or 35 percent, of CLI’s total property holdings.
Road to recovery
Lim noted China is on the road to recovery, with most metrics, including occupancy and tenant sales, showing improvement. “They are all heading in the right direction,” he said. “The problem is they are not moving as quickly as we thought they would. Recovery, in our view, is going to take longer.”
While the firm will continue to fundraise for Chinese products, it will focus on broadening its access to funding sources. CLI has raised over 4 billion yuan ($581 million; €538 million) from domestic investors since it launched its first RMB fund in 2021, and is now looking to participate in the C-REIT market, according to Puah Tze Shyang, chief executive officer, China, CLI.
“Such a platform will give us great access to asset recycling in the future, and it will present credible exit options which are very important to our private equity investors, both domestic and foreign,” Puah said, commenting on the C-REIT.
These strategies will become the key pillars of the firm’s plan to grow its fund management business, according to the briefing. CLI has garnered a total of S$3.2 billion of equity across four private funds since the beginning of 2023, representing a 28 percent increase from the S$2.5 billion of equity raised in full-year 2022. The capital raised included S$2.09 billion for CapitaLand China Opportunistic Partners Series, S$530 million for CapitaLand China Data Center Partners, S$150 million for CapitaLand Open End Real Estate Fund and S$368 million for CapitaLand India Growth Fund 2.
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