CSI Properties, a Hong Kong-listed real estate developer and investor, has launched its debut private equity real estate fund to invest in Hong Kong and China.
With a fundraising target of $800 million, CSI Partners Real Estate Fund will target value-add opportunities in Hong Kong, Shanghai, Beijing, Shenzhen and Guangzhou. PERE can reveal that the firm will hold its first close for the fund on around $300 million and the vehicle is expected to generate a gross internal rate of return of 15 percent or above.
To boost capital raising capability, the Hong Kong-based firm hired Andrew Taylor, former senior managing director at Macquarie Infrastructure and Real Assets, to become the chief executive officer for CSI Asset Management. Taylor left Macquarie last month to join CSI after having been with the former for 17 years. During his career at Macquarie, he had been responsible for the firm’s real estate business in Asia and the launch of its China retail business. For example, he oversaw the launch of the Macquarie Wanda Real Estate Fund, a joint venture between Macquarie Group and Chinese property developer Dalian Wanda, as well as establishing Macquarie China Retail Company in partnership with ADIA.
Founded by real estate veteran and Hong Kong tycoon Richard Li’s righthand man Mico Chung in 2004, the real estate firm focuses on repositioning and value enhancement of commercial properties. The firm made its first investment right after the SARS pandemic, purchasing the commercial building 88 Gloucester Road in Hong Kong from the Louis Vuitton family for HK$190 million ($24 million; €21 million). The asset was later sold for HK$800 million in 2007, according to local media reports.
Pursuing a value-add strategy, CSI has exited 25 investments and generated a median IRR of more than 40 percent since 2004, according to an investor document seen by PERE. Some of its notable investment projects include the refurbishment of Hong Kong’s commercial building Golden Centre in 2012 and J-Plus Hotel in 2011. The firm’s total assets grew from HK$300 million in 2004 to more than HK$25.6 billion in 2018, according to its website. At the same time, the firm’s headcount also reportedly grew from two people in 2004 to over 130 people in Hong Kong and Shanghai in 2018.