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The Carlyle Group plans to spin out its Chinese real estate team

Move comes as private equity firm refocuses its Asia strategy
September 10, 2018 11:15AM

The Beijing skyline (Credit: iStock)

The Carlyle Group plans to spin out its China-focused real estate team as investor appetites waned for a property fund dedicated to the country, Bloomberg reported.

The Washington, D.C.-based private equity firm overhauled its Asian unit by creating an integrated platform that invests in its real estate deals alongside other areas of business like buyouts, growth and currency deals.

But months after Carlyle decided to narrow its China focus and parted ways with senior property executives in the Asian group, the firm is spinning off its Chinese real estate team, which is led by Han Chen.

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Chen will continue to oversee Carlyle’s managed accounts until they’re sold, according to Bloomberg. Carlyle will still invest in Asian real estate through its main buyout fund for the region, Carlyle Asia partners V LP.

The move comes as investors showed lukewarm interest in Carlyle’s real estate-specific China fund.

“We discovered a nuance when it comes to investors and traditional funds in the Chinese market,” Brooke Coburn, chief investment office for Carlyle’s real asset group, told Bloomberg. “Investors want to be more prescriptive on terms including the timing of the exit or pursue either smaller transactions or deals that require shared control.”

The company began raising capital in 2016 for its Carlyle China Realty LP fund, which was targeting $500 million.

The fund had raised some $120 million by mid-2017, but at that point Carlyle stopped looking to raise more money, because the company realized investors were more interested in separately managed accounts as a way to put money to work in Chinese real estate. [Bloomberg] – Rich Bockmann