Warburg Pincus, Legend forge real estate deal

Nov 1, 2005

The global private-equity investor will place an initial $31 million into China projects.

Global private-equity player Warburg Pincus, with $12.5 billion under management, has teamed up with Legend Holding's real estate arm, Raycom Real Estate Development, in a strategic cooperation agreement to jointly invest in and develop projects in China.

Initially, Warburg Pincus will invest $31 million in projects Raycom is now developing, including Olive City, a large mid-end residential development in northeast Beijing. The partnership will also invest in commercial developments, in both first- and second-tier cities.

The two firms are hoping to build a model of cooperation between a Chinese developer and a global foreign investor, which the parties claim is a market first. Raycom brings local knowledge, a development track record and a brand, while Warburg Pincus offers investment expertise, financing strength and risk-control systems, according to Philip Mintz, Hong Kong-based Warburg Pincus managing director responsible for the new venture.

Mintz joined the firm earlier this year as a partner in its real estate group from GE Capital Real Estate Asia in Tokyo. He has also served as a director for M&A at Merrill Lynch in New York.

He is backed up by two associates, Chi Miao in Shanghai and Joseph Gagnon in Hong Kong, both of whom also joined the firm earlier this year. Chi was previously investment services manager at CB Richard Ellis in Shanghai, as well as a business development manager at a local real-estate development firm in China. Gagnon joined the firm along with Mintz from GE Capital. In addition, Beijing-based Paul Xu will serve the team as an analyst, having joined this year from Goldman Sachs Consulting.

Raycom was founded in 1994 as Legend Tech Park Development. It develops and operates Grade-A office properties in major cities, including the now renamed technology park in Beijing's high-tech Zhongguancun district. It is also exploring opportunities in real estate finance, including Reits, according to its president, Chen Guodong. Legend has recently made headlines through its controlling interest in Lenovo, which acquired IBM's PC business.

Warburg Pincus has invested $877 million to date in real estate companies around the world, including Guangzhou R&F Properties. Across sectors the firm has invested $610 million in companies in China, including AsiaInfo, Harbin Pharmaceuticals, Kasen International and Harbour Networks.