Warburg Pincus plans to invest $5 billion in an insolvent property management company in China

Warburg Pincus plans to invest $5 billion in an insolvent property management company in China

Warburg Pincus plans to invest $5 billion in an insolvent property management company in China

Warburg Pincus is forming a Chinese asset management business to invest in troubled real estate, with a goal of amassing $5 billion in assets over the next five years. The US private equity company will enter into a partnership with Wensheng, one of China's top special circumstances asset managers, to deal with real estate special circumstance investments, such as troubled properties. 

As per a joint statement released on Monday, the two would contribute up to $600 million. Warburg Pincus is entering the expanding distressed asset investment market, as more Chinese property businesses struggle with tighter cash and legislative restrictions. Increasingly firms are selling assets as a result of high debt levels and a government-led deleveraging effort

“In light of the ongoing financial reform in China and the continued regulatory development, the real estate special situations sector is entering an accelerated growth trajectory,” Zhang Qiqi, managing director of Warburg Pincus, said in the statement.


Foreign firms such as Blackstone Group Inc. and Brookfield Asset Management Inc. have also been looking for possibilities in China's troubled real estate industry. Wensheng Specific Circumstances Asset Management Co., a proposed joint venture, would specialise on purchasing single real estate projects via distressed owners. In Shanghai, Zhejiang, and Hainan, this has already developed some.


With far more than $6 billion invested in 36 companies since 2005, Warburg Pincus is among Asia's leading private equity firms in real estate investing.



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