Hong Kong private credit goes where banks fear to tread: loans against property
- Private equity firm Gaw Capital has started raising a US$100 million credit fund that will make loans against Hong Kong property
- It follows the launch of real estate private credit firm PACM’s special situation fund, which has a target of US$300 million
Hong Kong-based Gaw Capital and Pacific Aegis Capital Management Group (PACM) are building a US$400 million war chest to tap lending opportunities backed by properties in the city as they embrace the unloved real estate sector after it was shunned by banks taking a negative economic view.
Private equity firm Gaw Capital has started raising a US$100 million credit fund that will make loans against Hong Kong property, on the heels of real estate private credit firm PACM’s plan for a US$300 million special situation fund.
“Banks in Hong Kong have reduced exposure to the real estate sector for reputational reasons or because of their views on the macro economy, which created opportunities for us private credit lenders to take over what we think are high-quality assets for good borrowers who temporarily have some liquidity issues,” said Goodwin Gaw, founder and managing principal of the eponymous company.
Earlier this month, PACM, a real estate investment company, received a HK$112 million (US$14 million) commitment from Hong Kong-listed Oi Wah Pawnshop Credit Holdings in its special situation fund, which has a target size of US$300 million.
While Hong Kong’s property sector has suffered a severe drop in valuations, sluggish home sales and record-high office vacancy rates, some nonbank lenders view this as an investment opportunity.
