Fosun International is entering the Indian property market and plans to invest nearly $1 billion through a real estate platform it is setting up on the sub-continent, according to media. If completed, this would be the second major move in India for the conglomerate after its pharmaceutical arm purchased an 86 percent stake in Gland Pharma for $1.3 billion in July.
Should Fosun enter the Indian real estate space, it would find itself up against some familiar competition. Blackstone is the most prolific investor in Indian commercial properties and is said to be planning to list the country’s first domestically-listed REIT. Singapore’s GIC and Canada’s Brookfield are also major investors in Indian property, and China’s Dalian Wanda Group has signed preliminary agreements to develop industrial parks in India which it said could be worth as much as $10 billion.
According to media, Fosun aims to initially acquire income-producing rental assets, and could go on to pursue development projects. The rapidly expanding Chinese firm is said to be currently in talks with India’s Rising Straits Capital, a one-year-old real estate and infrastructure investment firm that already manages $1 billion capital, to invest in their funds.
Fosun Keeps With Platform Approach
In late 2014 Fosun acquired Japan’s IDERA real estate for an undisclosed sum, before going on to use the Japanese firm as a vehicle for acquiring two office assets in Tokyo.In moving into India, Fosun appears to be keeping with a platform investment approach similar to how it has entered the Japanese, Australian and UK markets.
In Australia the company which billionaire Guo Guangchang formed with three college buddies in 1994 entered the market in early 2015 by purchasing a Sydney office building with local investment firm PropertyLink for $93 million. Then in July last year Fosun’s property subsidiary, Forte Group, teamed with Australia-based EG Funds Management to build 1000 new apartments in Sydney and Brisbane, while the company is said to remain on the hunt for Sydney office assets.
Then in July this year Fosun formed a joint venture with London-based Resolution Property aimed at starting funds targeting large assets and portfolios in 14 European countries. The JV’s first fund together, Resolution Real Estate Fund V, is expected to launch later this year.
Branching Out Into Emerging Markets
More recently, Fosun has begun to look at emerging markets and bought out Rio Bravo, Brazil’s second-largest independent investment manager. Reuters reported that Guo is also in talks for Fosun to acquire a stake in Renaissance Capital, a Russian bank focusing on emerging and frontier markets.
“Our positioning in developed markets has been largely completed,” Guo was quoted as saying by Nikkei Asian Review. “To realize our ambition for deeper globalization, we need to add more positions in emerging markets now.”
The shift in strategy comes after Fosun had made a series of headline investments in the US and Europe, including spending $725 million in 2013 to buy Chase Manhattan Plaza in New York. Just over one year ago the Shanghai-based firm persevered through several rounds of bidding to acquire France’s Club Med in a deal that valued the resort operator at €939 million ($1 billion).
Fosun to Make Second $1 Bil Investment in India
Now turning to India, Fosun’s pharmaceutical division just two months ago acquired an 86 percent stake in Hyderabad-based Gland Pharma for $1.3 billion. The deal was the largest Chinese takeover of a company in India and saw the Shanghai-based conglomerate snap up all shares owned by KKR as well as those held by the company’s founder Ravi Penmetsa and his family.
Other companies vying for the medicinal injectables powerhouse included private equity firm Advent, medical company Baxter International and drug maker Torrent Pharmaceuticals.