Chinese investment manager Cos Capital plans to deploy up to €1 bn into European property over a three-year period following the launch in late October of its new European platform in London.
Headed by managing director Roberto Varandas (pictured), Cos Capital Europe will invest on behalf of the wider Cos Capital group, primarily in value-add opportunities across the office, residential, industrial, distribution, logistics and retail sectors. The initial focus will be on the London and UK market, broadening out to include other European countries over time.
Varandas said the new platform would seek to form partnerships with local specialists to tap value-add opportunities, via joint ventures, club deals or other forms of co-investment. The uncertainty stemming from the Brexit vote presents both a challenge as well an opportunity, he added. 'We believe in the long-term potential for the region as a whole, and the attractive, risk-adjusted opportunities it presents.'
Two key Chinese capital sources
With a head office in Beijing, Cos Capital has $4.6 bn (€4.2 bn) of assets under management and has been active in the US since 2014. The company is backed by two sources of capital: China Orient Asset Management (COAMC), one of four national asset management companies, and Sunshine Insurance, the eighth largest insurance group in China with over $85 bn of assets under management.
Both investors have different but complementary needs, Verandas said. While Sunshine Insurance needs to match its liabilities and has a stronger focus on core assets, COAMC is targeting returns higher up the risk spectrum. In theory, new capital for new investments could come from either bucket, but it is more likely that COAMC will fund value-add and opportunistic investments, Verandas said. Following the stabilisation of such investments, placement with Sunshine would be a logical next step, he added.
Lijian Chen, CEO of COS Capital with responsibility for the international business, added: 'To further grow our worldwide business, we plan to build up the scope and scale of investments in Europe that match what we have already achieved in the US, by helping investors diversify their real estate exposure globally.'
For the moment, the London office will be manned by Verandas, but the team will be expanded organically 'as needed'. Verandas said he was also not ruling out the possibility of buying a local platform to grow the company's European presence.
Until early 2016, Verandas was global head of business development at Aberdeen Asset Management. Previously he worked with Chen and Cos Capital's founder and CEO Wu Tao when he was European head of business development at UBS Global Asset Management. At the time he was responsible for launching the UBS/Gemdale China Property fund, and sourcing capital from Europe, Middle East and Asia to launch UBS’ first fund of this nature.
Growing international presence
Cos Capital was established in 2014 and has since grown to 100 employees with offices in Beijing, Shanghai, Shenzhen, Hong Kong, San Francisco and, more recently, London. Within real estate, Cos Capital is active in various business lines including Chinese equity investment funds; mezzanine and structured finance; and international funds.
In China the company has established a joint venture with Vanke for urban renewal and it operates an acquisition and development fund with Jingruis. It has also set up mezzanine and structured finance funds with two local commercial funds and with life insurer Aviva-COFCO. In the US it runs a special situations fund with private equity company KKR as well as an opportunistic fund with Atlanta-based developer Portman Holdings.