PE firm Elite Partners Capital forges closer ties with Ho Lee Group

Singapore

SINGAPORE's homegrown private equity (PE) firm Elite Capital has appointed the scion of property and construction firm Ho Lee Group, Micheal Tan Hai Peng, as its executive chairman.

This signals a further tightening of ties between the two sides since Elite won the backing of Ho Lee as its sponsor; the relationship between the key individuals of both firms go back a decade.

Elite has so far closed a £120 million (S$211 million) fund comprising real estate assets across the UK and has two more funds on the cards this year.

Mr Tan told The Business Times in an interview that he has known Elite's co-founder and chief executive Victor Song since 2009.

"I have worked with Victor before and know his ability to source and transform the right assets, which is something we, at Ho Lee, do too. So, we are on the same wavelength."

The pair had worked together in 2009, when Mr Song was in the investment team of the manager of Cambridge Industrial Trust (CIT, later renamed ESR-Reit), and subsequently, when he was the head of asset management and investment director at Viva Industrial Trust (VIT) before its merger with ESR-REIT last year.

Back then, as Mr Tan recalled, CIT was a potential buyer of one of Ho Lee's properties.

Later, Ho Lee would become one of the major sponsors of VIT, a Reit where Mr Song had played a key role, from crafting its business plans to undertaking acquisition and divestments.

Clearly, the relationship has presented further opportunities for both parties.

Thus far, Ho Lee has invested some £30 million in Elite's UK Commercial Fund, which last November snapped up commercial real estate across the UK worth almost £300 million. The fund's other investors include more than a dozen prominent institutional investors, family offices and ultra-high net worth individuals.

Mr Tan said the plan is to step up the fund size to £200 million and increase its assets under management to some £500 million.

The UK represents a new market for Ho Lee, the assets of which are largely in Singapore and South Korea.

Elite's portfolio of 97 freehold offices is let to the UK's largest government department, namely the Department for Work and Pensions.

"This is a perfect portfolio considering Brexit," said Mr Tan, referring to the uncertainty over the UK's exit from the European Union, which has dampened the pound sterling and asset prices in the UK.

"We think this resilient portfolio tides us over the transition period and when the uncertainty over Brexit clears up, we believe that the asset value will go up and the pound will recover as well."

Ho Lee is also co-sponsor of two other funds that are now taking shape and are set to be launched this year. One has a focus on logistics assets, mainly in eastern Europe, and the other involves a tie-up with Norway's sovereign wealth fund.

Elite's European Logistics Fund hopes to capture the opportunities presented by the single market as e-commerce companies shift their regional facilities to cheaper locations in Europe and as the ferrying of China-made products to Europe under Beijing's One Belt, One Road initiative develops. This fund could be worth at least 300 million euros (S$456 million).

Mr Tan said that, in line with this, Elite has acquired five plots of land in Poland, two of which have been developed and are now being leased out to tenants.

The growth-equity Norway fund, on the other hand, is expected to raise some US$100 million. Instead of being in real estate, its assets are in the renewable energy, space technology, fintech and biotech spaces. The Norwegian government has identified these sectors for development in its push to wean the economy from its reliance on oil and gas.

Elite is also mulling, among other things, a listing on the Singapore Exchange of its fund under a Reit model.

Mr Tan said: "It's definitely something we want to explore...(but) it also has to be a beneficial exit to all investors. We are still evaluating that option."