Post-Brexit exchange rate move brings chances for bargain-hunting
China Minsheng Investment Group, the nation's largest private investment fund, is actively looking for opportunities in the property market in London, following the UK's decision to leave the EU.
The move is part of domestic enterprises' expansion into the global market, experts noted on Monday.
Since September, Minsheng has acquired two offices for leading financial institutions in London in deals totaling HK$1.2 billion ($154.67 million), according to the filing of SRE Group, a subsidiary of China Minsheng, sent to the Hong Kong Stock Exchange on Monday.
The most recent was the takeover of a six-story office building, located at the center of the City of London, for 32.5 million pounds ($42.39 million), according to the filing.
The 34,000 square meter building is fully leased to global financial company Cazenove Capital Management for seven years at 1.5 million pounds per year, the filing noted.
On September 2, SRE Group signed a sale and purchase agreement to buy the London headquarters of French Bank Societe Generale, which is also located in the City of London, according to the filing the company sent to the Hong Kong Stock Exchange the same day.
The deal is valued at 84.5 million pounds, -Minsheng's largest investment in London's real estate market following the UK's Brexit vote, domestic news portal ifeng.com reported on Monday.
Brexit may hit the UK hard in the short term, but it also means promising investment opportunities for Minsheng, experts noted.
"In terms of the exchange rate, it is a good time for bargain-hunting in the UK since its currency has already depreciated more than 10 percent against the US dollar since the June 23 UK referendum to leave the EU," Wang Yumin, an expert from cross-border investment service provider CubeTech Global Asset, told the Global Times on Monday.
In the long term, Brexit will have much positive impact on the UK, which will be more independent in setting policies and decisions for the good of its economy, Wang said. Also, the EU will no longer be a drag on its economy, Wang noted.
The UK economy is in good shape, having posted 0.6 percent growth in the second quarter of this year, accelerating from 0.4 percent growth in the first quarter, the Office for National Statistics said last month.
"The growth potential of asset values" was another reason why Minsheng Investment has made its acquisitions, experts noted.
The company's strategic move into London's real estate market also comes amid a trend of Chinese enterprises going global, said Li Junjie, a partner at the Zhong Lun Law Firm and deputy director of the Institute of International Acquisition and Investment at Renmin University of China.
For example, the value of Chinese overseas merger and acquisition (M&A) deals was $54.3 billion during the January-July period, surpassing the full-year record of 2015, according to a statement the Ministry of Commerce sent to the Global Times in August.
The increase in M&A deals shows that Chinese companies are looking for potential opportunities in foreign markets to increase the competitiveness of their investment portfolios, Li said.
In addition, investments in property in London's financial center are always good choices, given the limited risks, Wang said.
