Canadian Investor Bets Big On Shanghai

While billions of yuan are flowing out of China to invest in real estate in the US, Australia and Hong Kong one company is heading in the other direction.

Canadian real estate company Ivanhoé Cambridge and Dutch pension asset manager APG Asset Management N.V. have announced that they have taken significant participation in Chinese company Chongbang via an approx. US$920 million capital raising.

Chongbang is a Shanghai-based retail-anchored mixed-use developer, owner and operator. This is the second institutional capital raising for Chongbang. Singapore’s sovereign wealth fund, GIC, is an existing shareholder of Chongbang. Chongbang presently owns and operates 428,000 m2 (4,6 million ft2) of retail and commercial space in Shanghai with another 417,000 m2 (4,5 million ft2) under development.

Chongbang was founded in 2003 by a group of Singaporean and Hong Kong investors, led by Henry Cheng and Stephen Wong. Mr. Cheng is an ex-Shui On Group executive widely credited with Shui On Properties' growth in Shanghai, inclusive of the iconic Xintiandi project, which has become a benchmark for lifestyle- based retail developments in China.

Chongbang’s management team continues to be headed by Mr. Cheng and the company now employs close to 400 people across its main functions. Mr. Wong continues to be the Chairman of the Chongbang group providing strategic oversight.

“Chongbang exemplifies Ivanhoé Cambridge’s growth strategy of building strategic alliances with prominent real estate companies that are proven industry leaders,” said Rita-Rose Gagné, Executive Vice President, Growth Markets, for Ivanhoé Cambridge. “We are enthusiastic about teaming up with other experienced institutional shareholders to ensure Chongbang’s continued growth and future success. Chongbang’s team has an outstanding track record and a compelling long-term vision. They are known for solid execution in creating and managing mixed-use, retail-focused projects. Now, they are better positioned than ever to respond to evolving consumer preferences and to new technologies that are reshaping the customer experience.”

She continued: “This investment represents a milestone in the execution of our Company’s strategy of significantly increasing our allocation in key growth markets, where China is an important pillar. We look forward to working with Chongbang with a view to increasing our investments in select, large-scale real estate projects in the Shanghai region.”

Sachin Doshi, Managing Director and Head of Private Real estate Investments, Asia-Pacific at APG, said, "Rapid urbanisation, growing disposable incomes and continued rebalancing towards domestic consumption are recurring themes in China and we believe Shanghai, more than any other city in the PRC will lead this consumption story. We like Chongbang's deep understanding of consumer preferences in their catchments and the strong lifestyle themed retail complexes they have built and operated successfully under the Life Hub brand.”

"Chongbang sees enormous growth opportunities in the retail-anchored mixed-use sector in Shanghai and its neighbouring cities, both in terms of development of new projects and enhancement of old ones, as the region steps up its urban regeneration programmes. APG and Ivanhoé Cambridge's participation will further strengthen Chongbang's ability to capture these opportunities," said Chongbang’s CEO, Henry Cheng.

Chongbang has identified several development opportunities in core retail precincts in Shanghai as use of proceeds from this capital raising. With an enviable register of long term institutional shareholders, Chongbang aims to more than double its portfolio of Life Hubs over the next few years to consolidate its position as a landlord of choice for top retail and lifestyle tenants in Shanghai and its surrounds.

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