China Wealth Fund Backs TPG Lender as Part of U.S. Property Push

  • Wealth fund holds 16% stake in TPG RE Finance Trust post-IPO
  • Fund with $814 billion has been boosting alternative assets

China Investment Corp., the sovereign wealth fund that controls $814 billion in assets, is betting on U.S. real estate by investing in a commercial real estate lender formed by the money management firm TPG.

In conjunction with last week’s initial public offering of TPG RE Finance Trust Inc., CIC disclosed in a U.S. regulatory filing that it holds about a 15.5 percent stake in the lender through affiliate Flourish Investment Corp.

CIC, which ranks as one of the world’s largest state-owned investment firms, is boosting its holdings in alternative assets such as private equity and real estate. The wealth fund accelerated that initiative last month with a $13.8 billion deal to acquire Logicor, a European logistics property company that owns warehouses in countries such as France and Germany, from Blackstone Group LP.

The Beijing-based fund, whose overseas investments returned 6.2 percent last year, has more than a third of its portfolio in alternative assets, according to its latest annual report. A CIC spokeswoman couldn’t be reached for comment.


Branching Out

TPG, founded in 1992 by David Bonderman and Jim Coulter as a private equity firm, has branched into other asset classes, including credit, real estate, hedge funds, and financing for early-stage companies. The firm oversees about $73 billion, according to its website.

TPG RE, based in New York, originates and acquires mortgages for commercial properties including offices, hotels and apartment buildings. As of March 31, the real estate investment trust held 54 first mortgage loans with a total unpaid balance of $2.6 billion, as well as mezzanine loans and mortgage backed securities. 

The REIT started in December 2014 with about $714 million of equity commitments from seven outside investors, “many of which have significant investments relationships with TPG,” according to a July 21 prospectus filed with the U.S. Securities and Exchange Commission. The lender issued additional equity through its IPO, selling some 11 million shares at $20 each for a total of about $220 million.

CIC’s Flourish affiliate held the equivalent of 9.39 million TPG RE common shares at the time of the IPO, according to filings. Another major Asian investor, closely held Nan Shan Life Insurance Co., held 3.38 million shares, a 5.6 percent stake. Both figures include their respective portions of a stock dividend that TPG RE declared this month, prior to the stock sale.

Jason Chudoba, a spokesman for TPG RE, had no immediate comment. Sara Ho, an assistant vice president in Nan Shan’s finance and accounting department, declined to comment through an email.

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