This article originally appeared in the Wall Street Journal.
By Fiona Law
HONG KONG — A U.K.-based startup asset management company is planning to raise around US$1 billion from the sale of five-year yuan-denominated convertible bonds this month to invest in Australia’s booming real-estate market.
If successful, this could be the first-ever yuan convertible bond sold outside of China, joining the flood of other “dim sum” bond issues, or offshore yuan bonds, in recent months.
Agincourt Capital Management which was founded late 2010, has hired Deutsche Bank AG and a Chinese bank to help arrange the issue, said Craig Turnbull, founder and investment director at the firm.
A spokeswoman at Deutsche Bank declined to comment.
Mr. Turnbull, who said he has been in the Australian real estate and financial services industry for 25 years, said the fund will seek to offer a yield of around 4%, payable in Australian dollars.
William Nobrega, managing partner at U.S.-based real estate consultant Conrad Group Inc., who is advising Agincourt Capital on the deal, said the fund is targeting investors from both mainland China and overseas that hold yuan funds and that are looking for a strong return from the booming Australian real estate market.
Agincourt Capital is targeting a return of 10% to 22% per year by investing in commercial and residential properties in Australia, Nobrega added.
Home prices in Australia have quadrupled in a little more than 20 years, according to the Real Estate Institute of Australia.
In Hong Kong, a hub for offshore yuan, deposits of the Chinese currency jumped fivefold on year to 510.7 billion yuan ($79 billion) in April, according to data from the Hong Kong Monetary Authority, boosted by investor demand amid expectations of the currency’s appreciation.
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