Chinese suitor circles Investa

As the first round of bidding for Morgan Stanley’s $8.9 billion Investa Property Group nears a conclusion, a colossal Chinese life insurance firm, Ping An, has emerged as a serious contender for the real estate empire.

The insurer, China’s second largest by market share, is widely viewed as one of the most aggressive suitors for Investa given its sheer scale and track record of snapping up iconic property assets.

In 2013 Ping An, which has total assets of over $US461bn, bought the iconic Lloyd’s of London building, marking its first offshore purchase, and followed that up with Tower Place in the capital.

The company is currently vying with Fosum, another Chinese behemoth, for a US$1.6 billion portfolio of buildings in the centre of Berlin as it seeks out relatively high-yielding blue-chip property assets. Ping An has previously stated it will consider teaming up with partners to explore opportunities, although it has no fixed acquisition strategy and it remains unclear how it will structure an offer for Investa, which is selling a $2.5bn portfolio of balance sheet assets, that include stakes in some of Australia’s most recognisable skyscrapers, like Deutsche Bank Place, as well as a management platform.

As The Australian reported last month, over 40 contenders have so far filed through the data room, with several listed domestic groups, including, Charter Hall, GPT Group and Dexus squaring up against long list of international names such as the US real estate giant, CBRE, alternative asset manager, Blackstone, Canada’s Brookfield, Chinese conglomerate Fosun and La Salle Investment Management.

However, one of the most acquisitive offshore investors, Canada’s massive Pension Plan Investment Board, has opted to steer clear of the auction.

Morgan Stanley acquired Investa at the peak of the last credit cycle and called in UBS last year to help advise on the sale of the business — a move first revealed by this newspaper.

It is understood that Investa’s advisers, along with its ­management team, will travel to Morgan Stanley’s head office in New York within the next two weeks to present a short-list of contenders.

Sources claimed Ping An may opt to submit a bid on its own and but the entire group outright, ­giving it control over the listed ­Investa Office Fund, along with its unlisted stablemate, ICPF, or strike a partnership deal with an Australian or Asian manager.

Alternatively Ping An may join a consortium and seek to take control of a handful of the assets from the balance sheet.

Chinese Life Insurers spent a combined $15 billion on offshore property last year after the ­government relaxed regulations limiting the sector from making international acquisitions in 2012.

The volume of purchases that have been made since then have led some to predict the mainland insurers will repeat the same large scale incursions made by the Japanese throughout the 1980s and 1990s.

This article first appeared in The Australian Business Review.