CITIC Capital hits $500m mark for China retail fund

CITIC Capital, the Hong Kong-based private equity and real estate firm, has held a second closing for its latest China fund on approximately $500 million.

According to US Securities & Exchange Commission (SEC) filings posted last week, the firm raised $475 million for its fourth China-focused private equity real estate fund, CITIC Capital China Retail Properties Investment Fund, from eight investors. But PERE understands additional investors have committed, pushing the total past the $500 million mark.

The firm previously communicated that it is targeting $600 million for the fund, although the SEC filings state it is offering $800 million of units in the fund. A final closing for the fund is expected in March.

CITIC becomes just one of a small collection to have raised equity specifically for Chinese real estate investments in the past year. Others include Century Bridge Capital, Gaw Capital Partners, a partnership between China Overseas Land and ICBC Bank, a partnership between Kohlberg Kravis Roberts and Sino-Ocean Land, Tishman Speyer, ARA Asset Management and CapitaLand.

CITIC held a first closing for the fund in November 2011, thanks in part to a seed commitment by Cleveland-based investment and advisory firm The Townsend Group. The pension of automotive giant Ford and the New Hampshire Retirement System also have made commitments, according to news source Alternative Assets.

The fund is structured as a closed-ended vehicle with a life of seven years and is expected to generate an IRR of approximately 18 percent and an equity multiple of 2x. Its capital is expected to be invested in retail and mixed-use properties in second and third tier cities.

PERE also understands approximately $250 million of the capital raised so far has been either invested already or is committed for investment across three transactions. The fund was seeded with the ID Mall, a shopping centre in Changsha in the Hunan province.

CITIC Capital’s real estate business has invested in 18 projects valued at more than $3 billion since its inception. In August, the firm was subject to a partial sale by joint owners CITIC Pacific and CITIC International – companies of Hong Kong’s CITIC Holding conglomerate – and China’s preeminent sovereign wealth fund, China Investment Corporation, to Qatar Holding, an investment company of Qatar’s sovereign wealth fund Qatar Investment Authority.

CITIC Capital declined to comment.