A partnership involving a European and an Asia-based investment house is being set up so that Chinese individuals and institutions can tap into assets such as UK warehouses.

An Asian-backed investment house and European asset manager have set up a partnership so that institutional and individual Chinese clients can put money into logistic and warehouse projects, mainly in the UK, unfazed by the country’s recent decision to leave the European Union.

The strategic partnership agreement is between PGC Capital and McCafferty Asset Management Group. Under the deal, PGC Capital will start raising capital from Chinese institutions and individual investors; the first phase of the scheme targets RMB1 billion ($147 million), of which RMB150 million is to be raised from investors, PGC and McCafferty said in a statement yesterday. 

The second phase of the scheme is also being planned, which will extend to institutional and individual investors in another five countries, including the UK, Israel, Germany, South Africa and Switzerland, the firms said.

“An increasing number of independent investors are looking for low risk investment opportunities that provide stable returns from overseas markets, which is an area where our partnership provides value-add,” said Denise Li, chief executive of PGC Capital.

The key driver behind the strategic collaboration derives from increasing demand by Chinese investors to see stable returns from manageable-risk investment targets around the world in the next three to five years, the firms said.

“The scheme will identify first-rate logistics warehouse projects which are reasonably priced and have great growth potential. In order to secure reliable investment projects for Chinese investors, the scheme will look for existing well-located warehouses in developed countries with mature legal systems and sound economic growth,” they said.

The warehouse projects of the first phase will be run by McCafferty Group and introduce a system provided by Yardi Systems, a software provider to the real estate investment management and property management industries. As a result, investors will have 24-hour access to information about property projects and tenants.

“Since 2012, the UK warehouse market has grown steadily as the UK economy has recovered. The vacancy rate of warehouses decreased to 7.1 per cent in 2016 compared with 18 per cent in 2012, while unit rents have grown rapidly at an annual rate of 5 per cent. Thus, we are very confident in the investment prospects of this scheme,” said Charles Whittle, chief executive of McCafferty Group.

Following the signing ceremony between the firms, PGC Capital hosted the “2017 UK Investment Outlook Summit”, where among the issues discussed was the UK’s referendum vote to leave the European Union. One of the senior attendees at the summit, Huaimin Wu, vice president of PGC Capital, said: “The UK’s decision to leave the European Union resulted in short-term market volatility. However, as a mature developed market, the UK will be able to arrange its trade agreements freely and independently. Therefore, UK assets are still attractive and will be of great value in the long run. The historically low level of the pound sterling will also mean that investors will be able to purchase high quality assets at a lower price.”