Swiss bank UBS plans to expand its Asian property business as investor appetite for China and India proves resilient to global economic uncertainty, its real estate head said on Thursday.
UBS, one of the most active arrangers of Asian share issuance, will
add four investment bankers to its regional team of 18 in Hong Kong
and Singapore, focusing on the property, gaming and hotels sector.
"I can easily think of 15 Chinese real estate companies that could
potentially raise money this year," Mark Ebbinghaus, UBS' Asian real
estate, lodging and leisure head told Reuters.
"There is speculation that we will see another five to six Indian
issuers, although maybe two to three of these will get done," he
In spite of the global credit crisis, triggered by problems in the US
subprime market, investors still want to plough money into Chinese and Indian property firms as the two economies continue to grow at a
blistering pace, Ebbinghaus said.
"People are taking longer term bets in China and India knowing that
not every deal there will make them money," he added.
At least three big Chinese property firms -- Hengda Real Estate Group, Star River Group and Longhu Real Estate -- are expected to raise a combined $4 billion in Hong Kong this year, while India's DLF Ltd. and London-listed Indian property group Unitech Corporate Parks are both in talks to float real estate investment trusts (REITs) in Singapore.
UBS topped the Asia-Pacific investment banking league table last year, earning over $700 million in fees, according to Thomson Financial data.
But the bank was also a prominent victim of the subprime crisis, with
$14 billion of write-downs. Last month, UBS sold a stake of around
nine per cent to the Government of Singapore Investment Corporation and a smaller stake to investors from the Middle East, believed to be from Saudi Arabia.
Ebbinghaus said UBS was working on a pipeline of Asian deals
potentially larger than the amount of capital it raised last year but
it would be hard to predict what would finally come to market.
"We will probably do as much capital raising in Asia in 2008 as we did in 2007," he said, adding that China would take the lion's share,
followed by Singapore.
Despite a buoyant first half, property-related fund raising in Asia
faltered towards the end of 2007 as risk aversion rose across the
Ebbinghaus estimates that about $25 billion was invested in Asia
ex-Japan public markets in the first six months of 2007, but more left
in the region in the volatile second half of the year.
But once the financial markets stabilize, capital should return to the
region as quickly as it left.
"Investors don't pay investment managers to sit on cash or put their
money into government treasuries and gold. They will have to go out
there and place some risk bets," Ebbinghaus said. (Reuters)
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