US insurance giant Prudential Financial has strengthened its presence in China by establishing its first dedicated real estate joint venture with Chinese conglomerate Fosun Group to invest in mixed-use development projects in China’s urban centers, according to a Prudential statement.
The JV is intended to focus on “key areas of growth” in the country, and both firms “anticipate investing in and developing mixed use projects through a combination of proprietary and third-party capital,” according to the statement.
Though the details of the partnership were not announced, PERE understands that Fosun is expected to identify potential projects and investments and do the development work, while Prudential will provide the funding and international expertise where possible. Fosun and Prudential are understood to be targeting both existing properties and development sites.
At this point, a target size for the new JV has not been disclosed. However, it is understood that both Prudential and Fosun are already looking at several investment possibilities, and have been discussing this new platform for some time. In the statement, both firms also mentioned an expectation “to work together on real estate projects outside of China.”
“The growth of China’s urban centers and aging of our population present significant opportunities for our two companies to help address economic and development issues of critical importance to China, drawing from our respective strengths in real estate, investment management and retirement,” Guo Guangchang, chairman of Fosun Group, said in the statement.
“We anticipate that Fosun’s investment ability and deep understanding of the market in China will continue to help us achieve Prudential’s goal of developing a successful long-term presence in China,” Prudential vice chairman Mark Grier added. Prudential, which invests through its Pramerica Real Estate platform in some countries outside the US, also announced its intention to move its China offices to the Bund Financial Center in Shanghai.
Fosun and Prudential have been working together since 2011 outside of the real estate sector when they launched the $600 million Pramerica-Fosun China Opportunity Fund with a $500 million commitment from Prudential, the insurer’s single largest investment in a third-party management corporation to date. The firms also started a 50/50 life insurance joint venture in China in 2012, and Prudential also became a cornerstone investor in Fosun’s second US dollar fund last year, which is reportedly targeting $1 billion to invest in European and international companies seeking to expand in China.
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