More onshore fundraising activities by foreign fund managers in China. Hence, long-term commitment for investment in China’s real estate market. Onshore Renminbi fundraising capabilities are seen more desirable under Covid-19 pandemic to diversify investor base.
Setting up RMB funds is not new, but there has been an increase in popularity following the lifting of restrictions for foreign companies setting up funds in mainland China, according to a notice published by The National Development and Reform Commission in October 2022. The release of the Shanghai government’s Qualified Foreign Limited Partner (QFLP) pilot programme in 2010 has given a boost in foreign investment, as well as the Private Fund Management (PFM) programme in 2016. However, apart from the rapid change of regulations and policies, foreign investors have also been facing challenges going through lengthy processing in Chinese language. Hence, a reputable local partner is desirable. The notice in October 2022 also emphasized the encouragement of bringing world-class talent into the country, which is a sign of China opening up to the world gradually after almost 3 years of pandemic, suggesting we could see an increased need for real estate investment recruitment in China and APAC.
Why is it more important to raise onshore RMB now?
Although China has started to relax its covid restrictions, overseas investors are still taking a ‘wait and see’ attitude towards China’s real estate market in early 2023, with implications for real estate investment recruitment as a whole. This has encouraged fund managers who already have a strong China exposure to raise onshore capital. With many foreign investors being relatively conservative towards investing in China real estate, domestic investors such as SOEs, insurance companies and trust companies. While foreign investors tend to invest in GPs with a promising track record and pipeline, domestic Chinese investors are more in favour of project-based investment instead of investing in a blind pool.
Who are the active RMB fund raisers in the region?
GLP has closed GLP China Income Fund VI (“GLP CIF VI”), an onshore income fund with RMB 7.6 billion of assets under management. Investors in the fund include leading domestic insurance companies, as well as other existing GLP institutional investment partners.
CapitaLand Investment (CLI) has launched two RMB-denominated single-asset real estate funds which have raised a combined RMB3.98bn from Chinese investors, including trusts, insurance companies, SOEs and securities companies.
Keppel Capital has launched a China Logistics Fund of RMB 1,400 million.
Lasalle has appointed Matthew Yao to lead its RMB strategy.
Impacts on Real Estate Investment Recruitment
When looking at real estate investment recruitment, all of the factors mentioned have led to an increase in demand for RMB fund raising professionals, especially those who have successfully raised onshore capital for foreign real estate fund managers. Not only because of their successful track record, but also their capability of managing between domestic investors and senior management within the foreign fund managers.
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https://www.wsj.com/articles/expats-shun-china-over-covid-policies-forcing-foreign-firms-to-scale-back-11663720291?mod=article_inline https://www.intertrustgroup.com/insights/why-rmb-funds-are-a-strong-draw-for-global-investors/ https://realassets.ipe.com/news/capitaland-raises-rmb4bn-for-two-real-estate-funds-updated/10063187.article https://www.glp.com/global/article/glp-closes-rmb-76-billion-china-income-fund-vi https://www.kepcorp.com/en/media/media-releases-sgx-filings/keppel-capital-launches-china-logistics-property-fund-/
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