China New Town and partners setting up $2.2 billion fund

SINGAPORE - China New Town Development Company - through wholly owned subsidiary CDB New Town (Beijing) Asset Management Co Ltd - is partnering Bank of Communications Schroder Fund Management and China Development Bank Capital Corp (CDBC) to set up a 10 billion yuan fund (S$2.2 billion) for investment in quality urbanisation projects.

The CDB (Beijing)-BOCOMM New-Type Urbanization Development Fund will largely focus on old town reformation, shanty town reformation, primary land development as well as integrated land and property development.

It will also explore investment opportunities in municipal facilities with exclusivity rights, such as water and waste treatment, alternative energies and public utilities.

This is in line with China's national policy, which is leveraging on urbanisation as an engine of economic growth.

The partnership will primarily focus on fixed-income investments, which will be backed by collaterals or guarantees by qualified counter-parties to ensure security and safe exit, China New Town said in a release to the Singapore Exchange on Tuesday. China New Town is a blueprint planner and developer of integrated new towns, with CDBC as a shareholder.

Of the 10 billion yuan fund, Bank of Communications Schroder Fund Management will invest eight billion yuan; CDB Development Fund (a fund raised by CDBC) 800 million yuan; China New Town's controlling shareholder CDBC 1.049 billion yuan; CDB New Town 150 million yuan; and CDB Investment Development Fund Management (Beijing) Co one million yuan.

CDB New Town is contemplating funding its investment through internal resources.

CDB Investment Development Fund Management (Beijing) Co is the fund's general partner and will operate as well as manage the funds by targeting urbanisation-related investments.

The investment period is set at eight years, with an option for a two-year extension.

"The partnership establishes a systematic mechanism to co-invest in CDBC's urbanisation projects, which will be able to help the company rapidly lift brand awareness and expand business network," the release said.

"With a relatively small amount of capital, the company will become more closely involved in an extensive list of CDBC urbanisation projects and is well positioned to discover developmental and operational opportunities along (the) entire value chain of urbanization, which in turn strengthens the group's position as CDBC's core operational platform in the field."

Shares in China New Town closed at 7.3 Singapore cents, up about 1.4 per cent, on Wednesday.

This article was first published on June 18, 2015.
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