CITIC Capital To Raise $2B For Distressed Assets Investment In China

CITIC Capital, the investment arm of Chinese state-owned conglomerate CITIC Group, is raising at least US$2 billion for a new fund to invest in distressed assets in the country’s real estate sector, said its chairman and chief executive at the World Economic Forum in Davos on Wednesday.

"We have started a new fund this year which will close sometime soon. So we will have ample dry powder to do new deals," Reuters reported, citing CITIC Capital’s founder, chairman and CEO Zhang Yichen in a chat with forum participants.

The new fund comes as private equity firms have raised US$445 billion since 2015 in new funds in Asia. This has led to a record high of US$336 billion of so-called dry powder — money committed but not yet invested — as of mid-December, according to statistics conducted by data provider Preqin.

Zhang said that while the new fund will primarily seek investment opportunities in distressed real estate assets in China, CITIC Capital is also exploring opportunities in Europe and elsewhere.

He said that CITIC Capital had not yet felt any impact from the tightened scrutiny of Chinese investments in the United States but there could be more obstacles, and the company is "mindful" of that. "But since our interest is in traditional, not modern technology, we feel any impact on us would be limited," Zhang was cited as saying.

CITIC Capital, known for its investment in Chinese delivery firm SF Express and the Chinese unit of McDonald’s, was founded in 2002 and headquartered in Hong Kong. The company led a US$10 million series C+ round of financing in Shanghai-based international student housing marketplace in December 2018.