London Asia Capital, the UK-listed merchant banking group, has set up a company to invest in distressed property in Greater China
The new company, London Asia Capital Land has an initial start-up capital of HK$100m (£6.5m). It will focus on distressed assets, where banks and finance houses have called in the finance, developers have run out of money, and similar situations.
It will look at a broad spectrum of residential and commercial properties, including hotels, business parks, and wind farms, and complete as well as part-developed schemes and greenfield sites.
Transactions will be identified through London Asia's network in China, including the recently-purchased stake in the Chinese auction house, responsible for disposing of distressed property assets. It will also take advantage of its relationships with China Synergy, the Beijing-headquartered property broker, and China Real Estate Services (CRES), the Beijing-based property group in which London Asia Chinese Private Equity Fund has a stake. CRES recently re-branded its 30 high street offices in northern China as London Asia Homes.
London Asia will own 40% of London Asia Capital Land and the remaining 60% will be owned by the management team and their associates.
Simon Littlewood, London Asia’s chief executive, said: ‘Recent controls imposed by the Chinese Government to cool the property market have created a number of opportunities for financiers in the sector, which warrant the creation of a specialist division and team, with their own balance sheet to leverage off’.