Donald Trump's Biggest Backer Has Been Quietly Operating In China For 12 Years

摘要: After Donald J. Trump was elected as 45th president of the United States, people began to focus much attention on whom will be in Trump's cabinet. Thomas Barrack, founder, chairman and CEO of Colony Capital, seems to be one of the most popular candidates for Secretary of Treasury. After some research, we find that his Colony Capital entered China as early as 2004 and has been primarily focused on distressed asset in real asset as well as tech and internet investment opportunities.

(Chinese Version)

Thomas Barrack, founder, chairman and CEO of Colony Capital

Thomas Barrack, founder, chairman and CEO of Colony Capital

After Donald J. Trump was elected as 45th president of the United States, people began to focus much attention on whom will be in Trump’s cabinet.

As is stipulated by American Constitution, US President is supposed to nominate cabinet members. Therefore, Trump is to pick all the 15 members of the cabinet, including Secretary of State, Secretary of Treasury, Secretary of Defense, Secretary of Interior, Secretary of Agriculture, etc.

However, since Trump has just entered the political arena, it isn’t an easy job to find candidates inside the core Washington political circle. According to American political-journalism organization Politico, Trump’s campaign team has already drafted a list of potential cabinet picks for the past few months, including both top conservative politicos and business outsiders.

Among them, the following three candidates, who are also Trump’s most fervent supporters in the election, seem to be his favorites:

1. Steve Mnuchin: Trump’s campaign finance chairman. He was former second-generation Goldman Sachs banker and currently CEO of Dune Capital Management. Besides, he is a Hollywood film financier and has invested in films including Sniper and Suicide Squad. Sources suggested that he was promised a role in Trump’ administration.

2. Wilbur Ross: He was known for investments in distressed companies as well as his firm support of Trump. It was reported that he was promised as Treasury of Commerce if Trump was elected.

3. Thomas Barrack: Trump’s campaign fund-raising chairman as well as his biggest financier. He is an American private equity real estate investor and the founder, chairman and CEO of Colony Capital, one of the biggest investment firms in real estate globally. At the same time, he is chairman of Hollywood entertainment company Miramax. Since Barrack served as Deputy Undersecretary of the United States Department of the Interior in the Reagan administration, many American finance media predicted that he might be a hot candidate for Treasury of Interior.

Driven by curiosity, TMTpost did some research into these candidates and the consortium behind them. It turned out that Colony Capital drew much of our attention. Founded in 1991, Colony Capital currently managed over $60 million of asset around the world, from Carrefour, Accor Hotels, First Republic Bank to Fairmont Raffles and Miramax Films, etc. Currently, Colony Capital is one of the biggest private equity real estate fund in the world.

At the same time, he was one the most popular candidate for Secretary of Treasury in Trump’s cabinet. According to public information, 23 per cent of Colony Capital’s compound return comes from globally, 35 per cent from Asia and 20 per cent from China. Indeed, from China.

So we look into its investment in China, and find out that Colony Capital entered China as early as 2004, when it teamed up with SIIC and established Colony China Opportunity Fund, which is primarily focused on investing distressed asset. Some of the major investors of the fund include: Asia Development Bank and International Finance Corporation. Its full asset exits China in 2011 and currently it still managed Chinese brands including Oak Chateau and Oakwood House, etc.

But why is Colony Capital China Opportunity Fund primarily focused on distressed asset and real estate? Well, this has to do with the founding of Colony Capital back in the United States.

Colony Capital initiated the first fund targeting investing organization in the middle of 1990s. During the over two decades afterwards, it is primarily focused on non-performing loans and distressed assets, issued several private equity funds in real estate, raised in total $24 billion and invested over $60 billion of asset. In other words, Colony Capital emerged through distressed asset and financial crisis.

Since its foundation, Colony Capital has been fond of distressed asset. As a matter of fact, Barrack won his first pot of gold through acquisition of Resolution Trust Corporation and thus established Colony Capital. Since then, Colony Capital has been focused on periodic arbitrage of distressed asset and has earned over $2.7 billion through investment in real estate by 1995.

Although Colony Capital China Opportunity Fund exited China in 2011, Barrack’s ambition in China didn’t there. In May, 2011, Colony Capital established its first RMB fund New China Opportunity, which is focused not only on real estate, but also in areas such as technology, internet and cultural industries

In October 2015, it was reported that traditional real estate biggie Colony Capital New China Opportunity Fund had acquired Dalian’s landscape project Midtown Center with 850 million RMB (over $124 million) in an attempt to create its entrepreneur ecosystem. According to the fund’s official statement, the new round of investment incorporated the transition from real estate industry to Internet Plus. By integrating various new types of entrepreneurial projects, from co-working, youth hostels to innovation coffee bars and innovation incubators, the fund attempted to establish a comprehensive internet innovation and entrepreneurship ecosystem.

On August, 12th, Shanghai LinGang Corporation, Zhuhai Huafa Group and Colony Capital signed a strategic cooperation contract and agreed to promote the upgrading and transformation of city infrastructure, industrial upgrading as well as investment in new industries by cooperating with each other in areas such as real estate investment, fund raising and capital management.

According to the introduction on its official website, Colony Capital New China Investment Fund is committed to providing professional service for investors through a dynamic investment structure. The average period of each project is around 2 to 4 years, while the average annual compound return is over 20 per cent.

Besides, the fund also co-established an early stage venture investment fund WE+ Fund with its old partner, which is primarily focused on investing tech and internet startups at early stage.

When we contact with Wang Xinzhi, a partner at the New China Opportunity Fund, he revealed to TMTpost that the fund had always been looking for opportunities in Chinese real estate industry, but had begun to shift its focus on tech, innovation and internet in the past two years.

According to incomplete statistics, Colony Capital New China Opportunity Fund has invested in several major angel capital investment firms and venture capital firms in China, including Gobi Partners, Share Capital, Rising Capital, Brain Capital, Elevation China Capital and Plum Ventures, etc. In addition, the fund has already taken part in early-stage investment of several projects, including WE+ co-working, You+ youth hostel, Sicily Culture, Niu Home, 36 Kr Space, P2 co-working, FirstPai Technology, Yimingbang, Top Health, Anlaiye, etc.

(Statement for Conflict of Interest: During our interview and research, we find that Colony Capital New China Opportunity Fund is involved with Rising Capital, which happened to be one of the A-round investors of TMTpost.)

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[The article is published and edited with authorization from the author @TMTpost please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.

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