Diverse club forms $500m China retail JV

A cocktail of firms, including Gaw Capital, a major US institution, the Italian Fingen Group of the Fratini family and Sino-US company Waitex, have clubbed together for a designer outlet joint venture, with Henderson Global Investors acting as investment advisor alongside the RE development arm of Fingen.

A group of firms and investors have clubbed together for a $500 million joint venture targeting Chinese factory outlet centres. Among those identified in the ‘Silk Road’ vehicle are the Italian Fingen Group of the Fratini family; Luxemburg -based China Outlet Mall, which is controlled by Italian entrepreneur Jacopo Mazzei; Gaw Capital Partners of Hong Kong; and the Sino-US conglomerate Waitex. The group also involves a major US institution, the identity of which could not be determined. 
Henderson Global Investors, the London-headquartered asset manager with an Asia platform, is the investment advisor alongside RDM Asia (the real estate development group of the Fingen Group in Asia, which is the development partner).

In a statement, the group said Silk Road would invest buy and acquire outlet malls across China. The group further noted that the partners are investing $200 million-plus of equity into the venture, with Waitex and Gaw Capital Partners working with RDM Asia as local operating partners.

Furthermore, the group recently completed its first acquisition. The Florentia Village Jingjin Designer Outlet is a 41,000-square-metre designer outlet centre near Beijing that was designed and developed by RDM Asia, with Fingen and Waitex as founding investors. The property opened as China's first authentic Italian outlet village in June 2011 and houses 165 stores offering a mix of luxury and premium Italian, international and Chinese brands and guaranteed discounts on goods. Prada is among the names sold there.

The venture harbours ambitions to develop a portfolio of at least four additional schemes. New sites have been identified in key gateway cities, with construction scheduled to start this year.

In the statement, the partners said the idea was to capitalise on the “outsized growth in spending” in the Chinese luxury goods sector. Alice Breheny, head of research at Henderson, called the retail sales ‘growth story’ in China “compelling,” with international and domestic retailers expected to continue their “aggressive expansion plans.”

“We believe the rental growth prospects for Chinese luxury outlets will be correspondingly impressive as retailers compete for the best assets. Luxury brands have some of the most ambitious expansion plans for the Chinese market, but they will be more astute than mass-market retailers with regards to location. Specialist outlet malls that bring together like-minded retailers and provide the quality of shopping experience that discerning Chinese consumers increasingly demand should perform very well.”