Golden Union Assets, jointly-owned by the U.S. private equity giant and China’s Golden Union Group, currently holds and manages 19 acquired properties worth 15 billion yuan ($2.32 billion), and expects assets under management to more than triple to 50 billion yuan in three years.
“This investment demonstrates our belief in the tremendous growth opportunity in urban renewal and redevelopment,” Qiqi Zhang, managing director of Warburg Pincus, said at a ceremony in Shanghai.
Warburg Pincus will leverage its global resources and local expertise to “turbocharge” the company’s growth, he said.
In real estate investing, urban renewal is the latest focus for Warburg Pincus, which has already invested in nearly 40 billion yuan worth of redeveloped projects in the country.
Warburg Pincus, whose president is former U.S. Treasury Secretary Timothy Geithner, previously made big bets in China’s logistics properties and data centres.
China has imposed curbs on the property sector, but has been encouraging investment in urban redevelopment and rental properties.
The establishment of Warburg Pincus’ new urban renewal platform also comes as China recently launched a public real estate investment trusts (REITs) market for infrastructure projects. A possible expansion of that market will potentially create an exit route for commercial property investors.
Zhang said that through the joint venture, Warburg Pincus seeks to capitalize on Golden Union’s decade-long experience in urban renewal.
Jessica Yu, chairman of Golden Union, said the alliance with Warburg Pincus gives easier access to long-term capital.
“What is the biggest challenge in holding urban renewal projects? You need long-term, and cheap money,” she said at the ceremony. “That’s why we join hands with Warburg Pincus.”
($1 = 6.4567 Chinese yuan)