Greenland Hong Kong raises US$300 million fund, steps back from One Belt, One Road projects
Likely strength in US dollar under Trump presidency has prompted the developer to change tack
Greenland Hong Kong has raised US$300 million of capital for the real estate fund it jointly set up with a Kuwaiti royal, but says it will refrain from investing along the “One Belt, One Road” route amid worries about financial turbulence.
Chen Jun, chairman and chief executive of the Hong Kong-listed company, said that risk management would be given priority in its overseas expansion while the fund initially focuses on US dollar-denominated assets.
“The market conditions have changed,” he said. “It is sensitive timing now and we will focus on dollar assets rather than the previous projects along the One Belt, One Road.”
Greenland Hong Kong is a unit of Shanghai-based Greenland Group, one of the mainland’s largest property developers.
Last year the company agreed with Kuwait Strategic Investors’ Al Wasset International (AWI), controlled by a member of Kuwait’s royal family, to launch a US$8 billion real estate fund to invest in “world-class” real estate projects.
The first round of fundraising that netted US$300 million of capital was closed recently.
The fund had aimed to make investments in countries in the Middle East, Southeast Asia, Africa and Europe that once formed the Silk Road and Maritime Silk Road trade routes.
But the forthcoming presidency of Donald Trump, whose policies may lead to a stronger dollar and devaluations in other currencies, has prompted Greenland to revise that strategy, Chen said.
“We will be extremely careful in picking investment targets,” said Chen, who is also an executive vice-president of Greenland Group. “We will look at the best projects in the world’s best cities.”
In 2013, Greenland completed a back-door listing in Hong Kong after buying 60 per cent of the enlarged issued capital of SPG Land.
The Hong Kong unit, following in the footsteps of its parent, is revving up diversification into non-property businesses as the mainland authorities’ clampdown on the overheated property sector intensifies.
Greenland Hong Kong’s online asset management unit generated a profit this year after only one year of operation. It came at a time when Beijing launched a determined crackdown on unlicenced peer-to-peer lending platforms that caused investors to lose dozens of billions of yuan.
Steven Jia, vice president of Greenland Financial Services, a subsidiary of Greenland Hong Kong, said the crackdown had offered more opportunities for the company to expand its online financial businesses.
Greenland Hong Kong is also teaming up with Ctrip, a mainland online travel service firm, to develop G-Hotel, a self-service hotel apartment brand targeting the booming domestic tourism sector while facilitating sales of Greenland’s properties built in popular tourist destinations such as Yellow Mountain.
The company recorded sales of 15.5 billion yuan in the first months of this year, up 34 per cent from the same period in 2015.