London Asia Capital has created a Hong-Kong based property division to build a HK$100m (£6.5m) portfolio of “distressed assets” in China.
The AIM-listed merchant bank said London Asia Capital Land (LACL) would buy troubled residential and commercial schemes where developers had run out of money.
The fund will also target hotels, business parks, wind farms, and partly developed green field sites.
London Asia will own 40% of LACL and the remaining 60% will be owned by LACL’s management team and their associates.
London Asia is funding its stake with the issue to LACL of 21,505,376 ordinary 5p shares in London Asia at an effective price of 12p per London Asia share.
The company said application will be made to admit the new shares issued by London Asia to trading on AIM, with admission expected on 1 June 2007.
London Asia chief executive Simon Littlewood said: “Recent controls imposed by the Chinese Government to cool the property market have created a number of opportunities for financiers in the sector, which warrant the creation of a specialist division and team, with their own balance sheet to leverage off.”
