TAN-EU Capital, the private equity real estate firm led by Rachel Renucci-Tan, has bolstered its ranks with the appointment of ex-Oaktree and Ping An executive Frank Xin as chief investment officer.
The hire coincides with the opening of the firm's first office in Shanghai, which Xin will head. From there, he will help execute the firm’s strategy of investing in distressed situations in China’s second tier cities, primarily in mixed-use developments.
The firm, which ex-Macquarie Capital Advisors fundraiser Renucci-Tan launched in 2009, announced the hire of Xin today stating he will be a dedicated resource, helping to source investments for the SOTAN China Real Estate I LP fund, one of few opportunistic investment vehicles to close in Asia this year.
A career spanning more than 19 years, Xin was previously vice president at private equity firm Oaktree Capital, managing director and head of real estate investment at Ping An Real Estate Investment Management and executive director and head of investment for Hong Kong listed Chinese property company Coastal Greenland.
Xin has been joined at TAN-EU by vice president Gary Sit, who has come from Harvest Capital Partners. Like Xin, Sit also has had a career focused on Chinese real estate.
Renucci-Tan described Xin as one of few real estate professionals with near two-decade track record of transacting investments “exclusively” in mainland China. She told PERE the hire came at a time when the Chinese government’s market “tightening policies are only beginning to take their toll”. She said: “Transactions volumes have fallen sharply across the board and prices are coming down rapidly in tier-one cities, and are expected to fall as well in second-tier cities.”
“We therefore expect a high number of distressed deals to come onto the market over the next 12-18 months. This is when we expect to zoom in and do our best deals.” She added the firm was in the final stage of due diligence on one such deal.
The SOTAN China Real Estate I LP, which was officically closed in February this year, is structured as a $400 million, 50:50 ‘club-style’ partnership with SOCAM Development, a Hong Kong-listed member company of the Shui On Group. Each partner has contributed $200 million with the TAN-EU component made using capital committed by European institutional investors. The $200 million committed by SOCAM has come from its balance sheet.
The 6-year vehicle, which was closed within 14 months of the start of fundraising, is expected to generate an IRR of between 18 percent and 20 percent from its investments.