Investcorp Holdings, one of the largest foreign buyers of U.S. real estate, remains bullish on the world’s biggest economy and expects the crisis enveloping China Evergrande Group to offer fresh opportunities for the private equity and alternative asset manager as it seeks to expand in Asia.
The top executive at the Bahrain-based firm described the problems at the Chinese developer as temporary and likely to be contained within Asia, and said the situation could even have “a calming effect on the prices of real estate that are really ballooning in parts of China.”
Investcorp, which already has an office in Beijing and launched a health-care investment platform last year, plans to keep its focus in China on the technology, health-care and food sectors, according to Executive Chairman Mohammed Alardhi.
“We’re there for the opportunities, we’re there for the long term,” he said in an interview with Bloomberg Television on Sunday.
The money manager can amass $100 billion in about seven years, Alardhi said. It currently manages nearly $40 billion, Alardhi said.
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Global financial markets are bracing for a potential collapse of Evergrande, which is buckling under more than $300 billion in liabilities. The company is China’s largest issuer of high-yield dollar-denominated bonds, and bills are coming due to an array of banks and suppliers.
Evergrande’s stock and bonds have tumbled in recent months on concern that the massive debt pile will lead to one of the largest restructurings ever in China. Investcorp has no “direct investment” in China’s real estate, Alardhi said.
Investcorp will continue to target sectors such as multi-family residences and industry-related realty, industries Alardhi described as resilient to crises and that earned its investors an 18% internal rate of return in the last 10 years.
In multi-family and industrial properties, “we still see strong fundamentals and lot of capital going into them,” Alardhi said. “Good growth of rent, good occupancy, resilient during Covid and we continue to do more of that,” he said, adding there’s need for more warehouses not just in big but also smaller cities.
Investcorp, which has delisted from the Bahrain stock exchange after almost four decades, now has the agility it needs to expand by going back into private ownership, Alardhi said. Abu Dhabi sovereign fund Mubadala Investment Co. in 2017 acquired a 20% stake in Investcorp, which has backed companies including Tiffany & Co. and Gucci Ltd.
Source: Bloomberg Quint
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