Warburg Pincus Asia

Warburg Pincus Asia Property Fund To Invest In IT Offices

ASIA PACIFIC – The Warburg Pincus Asia Real Estate Fund reached its final closing this week, with US$2.8 billion in amassed equity, exceeding its initial target by over 86 percent, reported Mingtiandi on Wednesday afternoon (22 December, SGT).

One year ago, Warburg Pincus launched the fund, which is touted as the private equity firm’s first ever fund focussing on Asian real estate investments. The fund was originally rolled out in November 2020 with a funding target of US$1.5 billion, but the company later raised the amount to US$2.5 billion.

The closing of the fund gives the company control over the 2nd biggest opportunistic property investment vehicle presently active in the region.

In particular, the Warburg Pincus Asia Real Estate Fund intends to invest on properties that would benefit from the region’s “new economy” sectors. These include data centres, warehouses, rental apartments, life science facilities, and IT offices.

“We are currently witnessing a once-in-a-generation change in real estate driven by technology where leading global investors are seeking to rebalance their portfolios by investing more capital into New Economy real estate where they have been meaningfully underweight”, said Jeffrey Perlman, Managing Director & Head of Asia Pacific property and Southeast Asia at Warburg Pincus.

Moreover, the private equity firm plans to redevelop and reposition properties like hotels and shopping malls, which have lost value or become obsolete due to changes accelerated by the COVID-19 pandemic.

Notably, Warburg Pincus revealed that it has divested all of its retail and commercial properties in China 6 years ago, while it has been going after data centres and warehouses.

Although the company continues to support commercial property funds in China and Asia, it is giving priority to platforms ready to cater to the tech industry, just like with its investment in DNE, a business park and logistics builder valued at USD$11 billion that was created last week via the merger of New Ease and D&J China.

Previously, Warburg Pincus cofounded logistics platform New Ease and business park specialist D&J, with mainland Chinese entrepreneur Sun Dongping.

Thereafter, the private equity company teamed up with US venture capital firm Sequoia Capital, American private equity markets firm StepStone Group, and Swiss private equity firm Partners Group in investing in the newly merged entity.

“D&J probably has the largest life sciences portfolio in Greater Shanghai, and it has been a real focus of ours over the past four or five years,” noted Perlman.

He added that in the last 4 years, China’s biotech industry has increased its aggregate market capitalisation of under US$20 billion to over US$200 billion today. And with this huge growth, companies in the sector are expected to require more space for offices and laboratories.

Furthermore, Warburg Pincus disclosed that over two-thirds of its property portfolio is exposed to new economy sectors.

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