Collin Lau, the first global head of real estate investments at China’s sovereign wealth fund, China Investment Corporation (CIC), has started his own alternative assets investing business, PERE can reveal.
The man who led CIC’s involvement in giant transactions including the recapitalisations of US retail REIT General Growth Properties (GGP), Australian logistics giant Goodman Group and London’s Canary Wharf landlord, Songbird Estates, has set up a new firm called Bei Capital which is based in Hong Kong.
Bei Capital will initially invest in real estate in China and in wider Asia Pacific. In time, the firm is expected to expand its horizons to include other alternative asset classes including private equity and infrastructure.
The switch from investor to principal constitutes something of a full circle for Lau who became CIC’s real estate head at the start of 2009, little over a year after the state fund was officially launched in September 2007.
He joined from Starr International, the New York-based financial services and investment firm and immediately set about investing the state fund’s coffers in core but heavily discounted real estate investments afforded by market conditions then. Sources told PERE for a feature on CIC, published in July 2011, how many of Lau’s investments during the first two and half years of his tenure in charge heralded “very high double digit” IRRs.
Impressed with his track record, it is understood that Bei Capital has already garnered approximately $1 billion of capital from a small handful of investors thought to be of a similar in scale to CIC, but not including the Chinese state fund. PERE’s sources said the firm is expected to put approximately $500 million of its initial funds to work in direct deals alongside partners over the coming six months and is already understood to have completed a maiden investment in China. Typical outlays by Bei Capital could be in the $150 million to $200 million range.
The capital is expected to be invested via a similar, long-term strategy which Lau adopted while in charge of CIC. The capital is understood to be structured via an evergreen enterprise vehicle which can be further capitalised periodically. Accordingly, Lau, who will lead its investment committee, and his team are slated to be incentivised periodically in line with its investments. Bei Capital is also expected to make coinvestments in its deals.
In addition to making direct investments, Bei Capital is also expected to make limited partner commitments to funds. During his time at CIC, Lau committed capital to funds of groups including New York-based platforms Morgan Stanley Real Estate Investing and Aetos Capital.
Overall, the firm is targeting approximately 15 percent IRR for investments held over a five year period, and 10 percent for investments held over a 10 year to 20 year period.
In the feature by PERE, Lau said how the state was most keen to invest in deals with multiple exit options, with long-term, recurring income and the possibility of reasonable capital gains.
Lau was appointed by the state fund as its head of European private equity last December only to resign from the role months later. After a succession period which saw his duties as real estate head assumed first by one his directors, Patrick Wu, and then after Wu also resigned, executives Xiao Qing Bai and Cai Zhi Wei, Lau departed the state fund in May before launching Bei Capital a month later.
Currently Bei Capital comprises seven staff based at the firm’s Hong Kong office. Lau is expected to grow the platform to up to 15 staff over the coming six months.