China’s Huatai unveils its first private credit fund – exclusive

The $500m fund has started deploying capital, focusing on corporate and real estate investments across selected countries in Asia-Pacific.

Huatai Financial (Hong Kong), a holding company owned by Huatai Securities, launched its maiden private credit fund via one of its subsidiaries in July, Private Debt Investor has learnt. Huatai Securities is one of China’s largest brokerage houses headquartered in Nanjing.

The vehicle, Huatai Special Opportunities Fund, is sized at $500 million and has a five-year fund life. It is understood the fund completed its first transaction, a $150 million mezzanine debt financing, for a construction project. Further details were not disclosed.

The fund will focus on illiquid credit and quasi-debt investments in selected countries across Asia-Pacific. The fund looks to invest in corporates and the real estate sector.

PDI understands that the closed-ended fund was backed by Huatai affiliates, including Huatai Asset Management. It is unclear if the firm plans to raise third-party capital beyond the $500 million first close.

Huatai Financial also conducts project financing and structured credit investments. It completed four projects and six structured investments in 2019, according to Huatai Securities’ annual report released on 24 April.

As PDI reported on Huatai’s international business in March, the company provided a financing package for Evergrande Group, in a deal that consisted of HK$4 billion ($516 million; €434.5 million) of asset-backed private notes.

Elsewhere, the brokerage group operates a private equity investment and management business via its subsidiary Huatai Purple Gold Investment. It also holds non-controlling interests in two other fund management companies for its asset management business: China Southern Asset Management and Huatai-PineBridge.

In future, Huatai plans to strengthen its cross-border linkage of platforms and resources, and enhance cross-border financial products, according to management discussion and analysis from its 2019 annual report.