CapitaLand to set up 2 retail funds worth $1.8b

By Fiona Chan, Property Reporter

PROPERTY giant CapitaLand is going shopping in India and China - for malls.

The developer said yesterday that it is setting up two new property funds worth US$1.2 billion (S$1.81 billion) to buy retail assets in the two most populous countries in the world.

Each fund will be worth US$600 million. CapitaLand will take a stake of about 40 per cent in CapitaRetail India Development Fund and 45 per cent in CapitaRetail China Development Fund II.

This brings CapitaLand’s equity stake in both funds to about US$510 million. The remaining stakes in the funds are expected to go to insurance firms, pension funds and corporations.

Both funds will invest in malls that are under development. The Indian fund will close in September, while the China one will close in October.

CapitaLand’s Indian fund is the group’s second retail-related move in the country, after it partnered India’s largest retailer Pantaloon in April last year.

They tied up to manage malls and to set up and manage property funds that develop or own malls in India.

Since then, CapitaLand has identified several retail investment opportunities in India. The new fund will allow it to grow its retail presence in India over time.

But CapitaLand added that it was too early to disclose which specific malls it was looking at.

As for China, the new retail fund is CapitaLand’s third in the country, after CapitaRetail China Development Fund I and CapitaRetail China Incubator Fund.

All three funds could feed into CapitaLand’s China mall trust. While the incubator fund focuses on completed malls, the other two funds will be used for projects still being developed.

Already, the funds in CapitaRetail China Development Fund I - also US$600 million in size - are 90 per cent committed, the developer said.

That is why a second fund is needed to invest in the pipeline of malls coming from CapitaLand’s recent joint ventures in China, such as its tie-up with China Vanke this month.

CapitaLand Retail chief executive Pua Seck Guan said the funds have already received overwhelming indications of interest. He is confident that the closing of the funds will be ‘a resounding success’.

‘Professionally managed organised retail concepts are relatively lacking in China and India, where we have identified immense opportunities,’ he added.

CapitaLand owns or manages more than 70 malls in 28 Chinese cities, and is looking to replicate its China strategy in India.

Source: The Straits Times, 31 July 2007