UPDATE 1-KKR, Sino-Ocean invest in China real estate fund

Mon Sep 5, 2011 12:06pm EDT

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(Adds detail)

* KKR investment gives Sino-Ocean stable financing in tight credit environment

* Fund to invest in mid- to high-end residential property

* KKR and Sino-Ocean to invest $70 mln each

By Stephen Aldred

HONG KONG, Sept 5 (Reuters) - U.S. private equity firm Kohlberg Kravis Roberts and Chinese property firm Sino-Ocean Holdings have established a $140 million fund to invest in China real estate, the companies said.

KKR's investment in the five-year fund provides a long-term stable source of financing for Sino-Ocean, as property developers face a tighter credit environment in China brought on by government concerns about overheating.

Sino-Ocean and KKR will use the fund, Sino Prosperity Real Estate Fund L.P., to invest in mid- to high-end residential developments, but can invest in other projects throughout China through outright ownership, joint ventures or M&A.

Sino-Ocean and KKR have each agreed to make a capital commitment of $70 million to the fund, they said.

The fund will make its first investment in Great Wise Investment, a Sino Ocean project in Dalian. The project is developing middle-income residential apartments which will sell for around $150,000 to $200,000, according to a source familiar with the matter.

Sino-Ocean is investing in the fund through its subsidiary Gemini Investments Holdings and KKR is investing through its $1 billion KKR China Growth Fund L.P.

The source declined to be named because he was not authorised to speak to the media. (Editing by Helen Massy-Beresford)

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