Warburg Pincus Creating Chinese Distressed Property Management Company

Warburg Pincus is creating a Chinese asset management company to invest in distressed real estate opportunities, with plans to garner $5 billion in assets in five years. The US private equity firm will work with Wensheng, one

BY Realty Plus
Published - Tuesday, 06 Jul, 2021

Warburg Pincus Creating Chinese Distressed Property Management Company

Warburg Pincus is creating a Chinese asset management company to invest in distressed real estate opportunities, with plans to garner $5 billion in assets in five years. The US private equity firm will work with Wensheng, one of the largest special situation asset managers in China, to create a joint venture focusing on real estate special situation investments, including distressed assets. The two will commit as much as $600 million, according to a joint statement on 5th July. Warburg Pincus is tapping into the growing sector of distressed asset investment as more Chinese property companies feel the strain from tighter liquidity and policy curbs. High debt levels and a government deleveraging drive are pushing more developers to sell assets. “In light of the ongoing financial reform in China and the continued regulatory development, the real estate special situations sector is entering an accelerated growth trajectory,” Zhang Qiqi, managing director of Warburg Pincus, said in the statement. Warburg Pincus joins foreign companies including Blackstone Group Inc. and Brookfield Asset Management Inc. in hunting for opportunities in China’s distressed real estate sector. The new joint venture, Wensheng Special Situations Asset Management Co., will focus on acquiring single real estate projects from troubled owners. It has already prepared some in Shanghai, Zhejiang and Hainan.