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ING raises $350m China fund

ING Real Estate has closed its first China-focused opportunity fund on $350m with plans to focus on residential developments in primary and secondary cities.

ING Real Estate, the property arm of Dutch insurance giant ING, has raised $350 million (€266 million) for its first private equity real estate fund targeting opportunistic property investments in China.

ING Real Estate China Opportunity Fund I will focus on mid-range residential developments in primary and secondary cities in China, largely in the form of joint ventures with local operating partners. ING tapped institutional investors from Europe, Australia, the Middle East, Europe and the US for commitments, as well as raising capital from high net worth individuals via its ING Private Banking arm. 

“We [think] China’s strong economy and fast urbanization will be translated into demand for real estate,” Dr. Robert Lie, chief executive officer of ING Real Estate Investment Management Asia, told the South China Morning Post earlier this year.

In a statement released today, Lie said: “[D]espite the austerity measures announced by the Chinese central government in May and August of this year, aimed at cooling the real estate market in China, our strategy of focusing on local housing in first- and second-tier cities in China in partnership with local developers is the correct one.”

This is not ING’s initial foray into China, a country it first entered in 1996. The firm is working with developer Shanghai Forte Land on a $74 million, 150,000-square-foot mixed-use development in the Hong Kou area of Shanghai and teamed up with property company Raycom International for two housing projects in Changsha, the capital city of Hunan Province. These projects, along with a proposed housing project in Tianjin, will be included in the opportunity fund portfolio.

In 2004, ING’s real estate arm acquired Baring Capital Partners, the China operation of Baring Private Equity Partners. Baring managed two real estate focused funds: a Beijing-focused, Hong Kong-listed vehicle and the China Property Development Fund, which has interests in two projects in Beijing. ING has also invested in the Shanghai Racquet Club, a 490-unit luxury project.