Ping An Trust, China’s second largest insurance company by premium income, has made a significant step towards bolstering its alternative assets investments after lining up key hires for a new, dedicated division from the world of private equity real estate.
PERE can reveal that the trust division of the insurer, responsible for assets and equity attributable to shareholders of RMB3.36 trillion (E395 billion; $537 billion) and RMB 182.7 billion respectively, according to company statistics, is lining up Rong Ren to head up a new division to be called the Alternative Investment Department. Through the department, Ping An Trust is expected to ramp up both its domestic and overseas investing activities across alternative asset types include real estate, private equity, infrastructure and structured products on behalf of Ping An entities, stakeholders and third-party capital sources.
Ren is expected to assume his new leadership role next month. He was understood to be on gardening leave following his departure in April from Harvest Real Estate Investments (HREI), a joint venture company between London-based property company Grosvenor and Beijing-based asset management firm, Harvest Funds Management. He left HREI after the company’s joint sponsors decided to shift its emphasis on outbound investment for Chinese investors, halting domestic investments in the process.
In addition, George Agethen, who was responsible for capital raising at HREI, also has joined Ping An’s Alternative Investment Department as a senior executive director responsible for overseas investments. He has already started in his new role. Indeed, at the PERE Forum: China 2014 conference in Shanghai yesterday, Agethen represented his new employer on a panel, coincidentally focused on outbound investment. He declined to comment further on the new platform. Ren, meanwhile, could not be reached for comment.
Ping An has been one of the most prominent and eagerly anticipated Chinese insurers when it comes to international investment in real estate since the Chinese government permitted investment by its insurers in the asset class in 2012. That was a status that become much enhanced after its acquisition of the Lloyd’s office building in the City of London last year under advice from another Chinese private equity real estate firm, Gaw Capital Partners.
The firm’s activities were further anticipated after Beijing increased its original allowance for China’s insurers to invest up to 30 percent of stakeholder capital in real estate, from 10 percent previously. Of that 30 percent, 15 percent of can now be invested in overseas property. At yesterday’s conference, it was discussed how China’s insurers where the biggest underutilized source of capital coming to global property markets. At more than $8 trillion in assets, insurers filling their quotas would constitute a remarkable boost for the property sector internationally as well as domestically.
And while Ren's hire and the formation of this new division is something of a nascent step in its ambition to greater exposure to alternative assets, panellists discussed how Ping An was ahead of most Chinese insurers when it came to formulating strategies to meet their appetites for such investments, a further indication that the majority of investment by Chinese insurers is yet to come.
PERE understands that no war chest has been assembled as yet for Ping An Trust’s Alternative Investment Division, nor has a precise investment strategy been set. However, it is expected to begin with real estate outlays, both direct and indirect, given the backgrounds of its leadership. Then, as it hires professionals to take the company into other alternative assets, its reach is expected to expand. To that end, a hiring spree for the division is expected to ensue imminently and it is understood that as much as 50 staff could be on board by year-end.