Cerberus leads $700m fundraising for Hong Kong developer(2)

The US-based firm has made its first major investment in Hong Kong and mainland China, buying 2.4 billion shares of property developer HKC.

Cerberus Asia Capital Management has led a 5.46 billion Hong Kong dollar ($700 million, €505 million) fundraising for Hong Kong property developer HKC.

Cerberus will buy 1.37 billion new shares along, and two other buyers, existing shareholder Penta Investment Advisors and Eric Oei, HKC’s chief executive, will buy 1.03 billion new shares. In addition, Cerberus will provide a secure three-year $500 million loan for HKC, dependant on the company meeting certain conditions. Oei will remain the company’s largest shareholder at 42.6 percent, while Cerberus will own 18.6 percent of the company. Penta’s stake will remain unchanged at 14.4 percent.

Originally operating as a building contractor, HKC has turned its attention to real estate development and wind energy. Oei told the International Herland Tribune that the company will use these new proceeds to invest in at least seven property projects in four Chinese cities. The company plans to develop three office projects in Shanghai, a residential and an office and retail project in Tianjin, and residential projects in Shenyang and Qingdao, Oei said. The company also announced last year that it is planning to build a wind farm the size of Hong Kong in Inner Mongolia.

Penta and Cerberus will each nominate one non-executive director to the group’s board and join the investment committee of the board. Penta Investment Advisors is an Asian-focused alternative investment manager founded in 1998. The firm has $3 billion in assets under management.

Rising private equity super firm Cerberus recently attracted new headlines earlier this month when it agreed to buy US automaker Chrysler. The firm’s Asian arm has up to this point been focused mostly on Japan.