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We target to generate uncorrelated returns by primarily investing in real estate related high-yield special situation investments in Greater China.
We target to generate uncorrelated returns by primarily investing in real estate related high-yield special situation investments in Greater China.
Private Equity Investments
✔ Target companies with elements of sustainable development, including ESG (Environmental, Social, and Governance) factors, research and development capabilities, and a wide range of applications.
✔ Technological innovation is the primary screening criterion.
✔ Leveraging industry insights and technical support from our partners.
Private Equity
✔ Focus on investment opportunities in the substitution of local technologies in a number of sectors including healthcare, green energy, new materials, and energy management.
✔ Target companies with elements of sustainable development, including ESG (Environmental, Social, and Governance) factors, research and development capabilities, and a wide range of applications.
✔ Technological innovation is the primary screening criterion.
✔ Leveraging industry insights and technical support from our partners.
Private Credit
✔ Seeking out companies with financing needs that are restricted by traditional standardized financing channels through a global network of relationships with financial institutions, real estate enterprises, financial advisors, and professional organizations.
✔ Continuously maintained relationship with a pool of borrowers provides us with stable investment opportunities.
✔ Managing investment risk through rigorous risk control measures on a case-by-case basis.
✔ The cornerstone of our investment philosophy is the focus on recovering the principal before considering investment returns.
✔ The collaterals are usually real assets with liquidity and predictable cash flows.
Green Energy Infrastructure
✔ Following the global trends of ESG and low-carbon sustainability.
✔ Collaborating with well-known companies/listed companies in the green industry, such as photovoltaics, energy storage, wind power, integrated energy, EV power chargers, green energy trading, and carbon asset management, and making green infrastructure investments based on the investment needs of different industries.
✔ Fully leveraging the advantages of partners in customer resources, industry resources, professional technology, etc., integrating industry resources, uncovering high-quality projects, effectively reducing investment project operating costs, improving project investment efficiency and profitability.
✔ Focusing on green energy infrastructure investments with predictable and stable cash flows to reduce investment risk.
Private Credit
High yield private credit backed by real estate and/or quality assets that generate predictable returns
Opportunities
Increasing regulatory restrictions on bank lending force borrowers to seek financing elsewhere, thus leading to higher demand for private loans.
Due to the crackdown on shadow banking sector in China since 2017 and the increasing debt financing needs limited by Basel Accords, we continue to see further increase in this sector and we are confident in making new investments on a stable and consistent basis.
Investment Approach
We focus on investments primarily in secured loans across various industries. Investments may be time sensitive (target 1- 3 years’ lending horizon) or event driven where we believe risk is fundamentally mispriced.
Downside protection – we accept quality and liquid land and real estate as the major collateral for downside protection as real estate market has a pivotal role to boost the GDP and is probably one of the safest asset classes in Greater China. The land and real estate prices have continuously grown for the past decade.
Distressed Assets
Undervalued debt and equity with solid fundamentals where we can identify operational value-add, or land opportunities in Greater China with loan-to-own approach
Opportunities
High leverage coupled with deleveraging push creates opportunities for distress investments with control. China’s NPLs pool increased from USD 1.4 trillion in 2018 to USD 1.5 trillion in 2019. It continuously grew in 2020 due to the pandemic and deleverage. New rules regulating and limiting financing for the real estate industry (“Three Red Lines” and deleverage initiative), we expect real estate distressed assets to grow even further.
The underlying assets of real estate distressed asset can be various: commercial complexes, offices, land, apartments, and factories. Since 2018, the majority of recoveries on distressed asset has been from sale of real state collateral or recoveries made via bankruptcy, are the most valuable asset class in China.
Investment Approach
Single deal approach.
Loan to own approach – purchase the distressed asset with large haircut (usually ~50%) and negotiate favorable term to either gain a fixed return + equity kicker or control the land collateral when the borrower default.
Urban Renewal
Acquisition opportunities to transform industrial assets into residential/commercial developments
Opportunities
Urban renewal is a national reconstruction initiative aiming to improve city appearance, namely transforming industrial lands to commercial/residential land at lower cost. The area of completed renewal reached 320 square kilometers in 2019 in Greater Bay Area (GBA) only. This initiative has already attracted more than 60% Top 100 developers to expand their land banks by this approach.
The demand for residential land in the GBA, the gradual maturity of urbanization initiatives, and the flexible land policy granted to Shenzhen have activated a huge secondary land market, creating development opportunities for a large number of undervalued land.
Many mid-small cap developers are struggling with liquidity but may happen to hold very promising land banks for urban renewal purpose. Moreover, factories within the new zoning areas will be relocated to give way to commercial and residential real estate development.
Investment Approach
We look for deals where the zoning has been changed from industrial to residential/commercial and all redevelopment requirements set out by the local government have been met.
We seek to work with major real estate developers and secure them as end buyers upon reaching urban renewal milestones when we make the investments.
Normally a 2X valuation uplift from a factory to a commercial, and a 3X from factory to residential land.
Private equity, private credit and green energy infrastructure investments.
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