Vanke gears up for funds management

One of China’s largest developers is sounding out international investors about raising funds for its real estate projects as it adopts an “asset light” business model.

Hong Kong-listed Chinese developer China Vanke has entered into preliminary discussions about launching its own funds management business to give international investors access to its pipeline of development projects, PERE can reveal.

The Shenzhen-based developer is still in the process of finalizing the strategy for its funds and hiring the team to manage them, but Charles Ma, Vanke’s head of global strategy, investments and business, said the company is already in communication with several institutions about backing.

“Over the course of this year, we will finalize on details of the fund we wish to raise including its strategies, time frame, target size, team composition and seed/pipeline projects,” Ma explained. Vanke has not yet determined when it will officially launch its first fund.

So far, Vanke has already assigned between at least five people, including Ma, to build out the fund management platform. The people assigned already work in three different platforms of Vanke: in the US, Hong Kong, and its broader investment strategy platform. In the next 18 months, Vanke is expecting to build out a full team specifically for fund management, though the size of that team has not yet been determined.

Some of the themes Vanke’s new arm will focus on include China’s continuing urbanization and the maturation of the market. For investors looking for “stable and predictable returns” from real estate, China is becoming an increasingly attractive market, Ma said.

With a combined market capitalization of about $16.3 billion on both the Shenzhen Stock Exchange and the Hong Kong stock exchange, Vanke now has about 300 pipeline projects under development in 60 Chinese cities. The same teams in those cities would likely help to source the seed investments for Vanke’s funds.

“Vanke believes that as a key player in China’s real estate landscape, closer integration with the global capital market is a critical step and important strategy for continual success in the future,” Ma said. “From a strategic perspective, Vanke welcomes an increasing mix of stable and reputable long term capital partners around the world as we move increasingly to an asset-light business model to more and more rely on our development, operating and asset management expertise.”

While developers with fund management arms are common internationally, particularly logistics property businesses such as Global Logistic Properties, Goodman Group and Prologis – few Chinese developers manage their own international funds as of yet.