DNE, a Chinese developer and operator of new economy real estate such as logistics and cold chains, said it had completed fundraising for a $2 billion offshore development venture that can be financed in both US dollar and the yuan.
The dual currency arrangement is relatively rare, though the Chinese currency is gaining popularity among overseas investors.
The Shanghai-based operator, which also builds life sciences and modern manufacturing parks, said the logistics fund launch shows offshore investors remain interested in China’s new economy segments, despite challenges in global markets.
“We are witnessing a new set of opportunities driven by the rapid rise of new economy segments,” said Keaton Yu, DNE’s head of capital and fund management.
The unique funding strategy “gives investors the flexibility to pay in either offshore yuan or dollar,” Yu said, adding that nearly all China-focused, offshore-based private equity real estate funds were historically funded in dollar.
China has stepped up efforts to promote the use of yuan in international trade such as oil and gas purchases, resulting in an increasing amount of offshore yuan being ploughed back to China assets through financial investment.
“An increasing number of global institutional investors now have offshore yuan, and paying in yuan for their portfolio in China naturally offers the benefit of hedging currency risks,” said Yu.
The $2 billion investment platform, to be managed by DNE, will develop and operate state-of-the-art logistics facilities in key mainland hubs, with China’s rapidly-growing real estate investment trusts (REITs) market a key exit channel, he said.
As China’s economy slows amid growing geopolitical tensions, Beijing has stepped up development of the “new economy”, encouraging investment in areas such as chipmaking, data centres, robotics and life sciences, while reducing reliance on home building and exports.
DNE has $16 billion in assets under management and has launched ventures and funds with global institutional investors.