Pacific Alliance invests $21m in China development

The Asia-focused private equity firm has partnered with a Mainland China developer part-owned by Sam Zell’s Equity International to build a residential development in Huzhou.

Pacific Alliance China Land, a Greater China-focused vehicle managed by Pacific Alliance, has invested $21 million (€13.2 million) in a residential development in Huzhou, close to Shanghai in China.

The project is a joint venture with Shanghai Jingrui Properties, a mid-sized mainland China developer that is minority-owned by Sam Zell’s Equity International.

The investment had a relatively low entry value, with the land cost at an approximate 20 percent discount to its latest valuation according to the firm. Huzhou is a fast growing third-tier Chinese city with a population of 2.57 million located in the Yangtze River Delta. Its per capita gross domestic product is higher than larger second-tier cities such as Chengdu, Kunming, Chongqing, Wuhan and Changsha.

The $400 million Pacific Alliance China Land vehicle is focused on investing in existing properties, new developments, distressed projects and pre-IPO and IPO real estate companies in Greater China.

Pacific Alliance was launched in 2002 by Horst Geicke and Chris Gradel to focus on buying assets at a discount in North and Southeast Asia. Geicke is the former president of the European Chamber of Commerce in Hong Kong and is also a former adviser to the Hong Kong Government. Gradel formerly worked with the Pritzker family, the owners of the Hyatt hotel chain, managing their investments in China through their Marmon Group holding company.

The Hong Kong-based firm is currently planning to launch two new funds totaling $2 billion to invest in Chinese companies and real estate. Elsewhere in Asia, Pacific Alliance also has a $633 million dedicated Vietnam real estate fund through its subsidiary, VinaCapital, as well as an AIM-listed closed-end Vietnam infrastructure fund, also managed by VinaCapital.