Century Bridge in China fund debut

"This is a very difficult market to raise money as a lot of pension funds and endowments are having their own problems after the global financial crisis," Delatour tells AVCJ. "There is also a huge misunderstanding in that some foreign investors consider the risks of doing business here to be much greater than they really are."

Nonetheless, the first-time vehicle - Century Bridge China Real Estate Fund - has attracted a number of pension funds, endowments and fund-of-funds as LPs. These include Church Pension Fund, Metropolitan Real Estate Equity Management, Merseyside Pension Fund, Quilvest and Deutsche Finance Group. Placement agents Avec Capital and XT Capital Partners led the fundraising on behalf of the GP.

Century Bridge is not the only foreign private equity firm that believes in Chinese real estate. Last year, property market investment reached $6.75 billion, higher even than the $4.55 billion and $3.95 billion seen in 2007 and 2008, respectively, before the financial crisis. In April, SOTAN China Real Estate I, the $400 million fund co-managed by Hong Kong-based real estate private equity firm Tan-EU Capital, made its debt investment with the acquisition of a 102,000 square-meter site in Tianjin.

"As the government has tightened bank lending and restricted trust companies to provide capital to developers in the last couple of years, this creates a greater opportunity for foreign direct investments," Delatour says. "We believe we should not spend any more time and effort raising money but invest, and once we invest all the money we will go and raise a second fund."

The vehicle will focus on build-to-sell, middle-income and residential real estate projects in tier-two cities. With China's urbanization and infrastructure drive showing no signs of slowing, there should be no shortage of willing mid-market buyers. According to McKinsey & Company, the country's urban population by more than 350 million by 2025.

Delatour adds that all investments from the fund will be done via joint ventures. Last year, the private equity player made its first exit in China, selling its stake in a $125 million joint venture with JiaHeng Real Estate. The joint venture - which was partly funded by Century Bridge's balance sheet - built 1,200 residential units in 11 high-rise towers in Xi'an, Shanxi province.

"For foreign investors, it is always wise to do business in China by partnering with developers who have good reputation, experiences and knowledge about how to do business in a particular city," Delatour says.

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• Topics
• Real estate
• Fundraising
• Greater China
• Century Bridge Capital
• China
• Fundraising
• Real estate