Savills IM forms Euro JV with $8bn Chinese private company

The real estate investment management business of London-listed property services firm Savills has raised £50m, mainly for its London residential development fund, via the formation of a partnership with newly-formed Chinese investment company, China Minsheng Corporation.

Savills Investment Management (Savills IM), the real estate investment management business of London-listed property services firm Savills, has formed an investment management platform with China’s first ‘national-level private investment company’.

The firm, which has now officially changed its name from Cordea Savills, yesterday announced alongside partner China Minsheng Investment Capital, the formation of an investment management platform that will over time roll out a series of investment funds for various European property strategies.

The partnership has commenced with the launch of CMISM European Investment Fund, an investment fund initially focused on investments in London’s residential market to which China Minsheng has committed cornerstone capital of £30 million (€41.47 million; $46.76 million).

The closed-ended vehicle is also expected to be marketed to other limited partners although no ultimate fundraising target was disclosed. From investments, the partners are expecting a net return to investors of 15 percent.

The majority of the seed capital will be deployed into an existing London residential fund managed by Savills IM called Prime London Residential Development Fund (PLRDF) II with a smaller proportion of the capital to be invested in other UK assets.

As part of the tie-up, China Minsheng Investment Capital, which is a subsidiary of newly-formed Shanghai-based private conglomerate China Minsheng Investment Corporation, will also commit an additional £20 million as an LP in PLRDF II.

PLRDF II is expected to attract up to £150 million of equity in total. Savills IM held an initial closing the vehicle of about £33 million following a commitment from ‘a major bank’ in Singapore last September.

Following this opening capital provision, China Minsheng, which is capitalized by 59 Chinese private enterprises has as much as RMB50 billion €7.14 billion; $8 billion of registered capital, is expected to back further funds launched by the partners across the region.

Secondarily, the platform is expected to provide Savills IM’s investor pool with a conduit to making investments in China.

Justin O’Connor, chief executive officer of Savills IM called the tie-up “ground-breaking” and said he expected this opening commitment by China Minsheng to precipitate “many highly attractive real estate investment opportunities in the years to come.”

“Our inaugural fund, CMISIM European Investment Fund, is well-placed to deliver superior risk adjusted returns by offering immediate exposure to PLRDF II and other funds and projects managed by Savills IM.”

Terry Liu, chief executive officer of China Minsheng Investment Capital, described the venture as “an important step in establishing a global real estate investment platform. Given the strategic importance of London and its buoyant real estate market, we are pleased that this will be the initial investment focus of our partnership.”

“Our strategy is to build a globally diversified portfolio and in Savills IM we have the ideal partner to make that happen.”