Leading investment companies set up two offices in Shanghai
After their respective registration with the Chinese regulators completed on Friday, KKR and Brookfield - the world's leading investment companies both opening offices in Shanghai - are ready to explore deeper in the Chinese market.
KKR Investment Management (Shanghai) Co Ltd and Brookfield (Shanghai) Private Funds Management Co Ltd have completed registration for private equity and venture capital managers in China, according to the public information released by the Asset Management Association of China on Friday.
KKR Investment Management (Shanghai), an arm of the US PE giant KKR, will see its asset under management of no more than 500 million yuan ($70 million) with its businesses covering PE investment, PE investment fund of funds, VC and VC FOF, according to AMAC information.
With its Shanghai office opened on Feb 26, KKR has two private fund managers registered in China so far, with the first one KKR Investment Management (Hainan) registered in April 2022 as a qualified domestic limited partner.
According to its fiscal results released on Feb 6, KKR made a total income of $14.5 billion for fiscal year 2023, which was 2.5 times the figure for the previous fiscal year. The company's net profit came at $3.68 billion in the 2023 fiscal year, while it reported a $590 million loss in 2022. Raising $69 billion in 2023, KKR saw its AUM reaching $553 billion as of the end of 2023.
In the 2024 Global Macro Outlook, Henry McVey, chief investment officer of KKR's Balance Sheet and head of KKR's global macro and asset allocation, wrote that the new growth drivers of the Chinese economy are industrial digitalization and the energy transition, with the respective annual growth rate as much as 40 percent. Each sector represents about 10 percent of the Chinese economy.
Given China's competitive cost and resource advantage in the above two areas, the country will look to increase its competitiveness, especially in the electric vehicle sector, he wrote.
"Investors will talk more about these drivers than they will about housing and exports, both of which we think have peaked in absolute terms and as underpinnings to the China growth story," according to McVey.
KKR set up the Hong Kong office in 2005 and registered an investment consulting firm in Beijing two years later. Its investment cases in China include Haier Group, ByteDance and Sunner Development Inc.
As one of the world's leading alternative investment companies focusing on sectors of real estate, infrastructure, renewable energies and PE investment, Canadian multinational company Brookfield started to explore the Chinese market in 2014, with its AUM reaching $15 billion in China up to date. The company's total AUM has exceeded $900 billion so far.
In mid-August 2022, Brookfield acquired a serviced apartment project in northeast Shanghai's Yangpu district for a reported 1.26 billion yuan. The 42,000-square-meter complex is Brookfield's first rental housing project in China.
Last year, Brookfield acquired the second rental housing project in central Shanghai's Jing'an district. It also acquired a 70,000-sq-m logistics project in Jiashan of East China's Zhejiang province and invested in more than 800MW of wind and solar power projects.
At the beginning of this year, the municipal government of Shanghai introduced a set of 32 policies to facilitate the high-quality development of equity investment. Efforts will be made to attract more equity investment institutions to set up operations in Shanghai to form an industrial cluster, as it is said in the policies.
