Latest thoughts and insights from the InvestUK team
In this section you will find FDI (foreign direct investment) and high value immigration related news and resources, as well as the latest insights from our team. Our goal is to enhance our clients’ and stakeholders’ understanding of the UK enterprise economy.
InvestUK secures major UK real-estate investment agreement with China’s Henry Global
02 December 2016
Participation by one of China’s largest property investment management companies in InvestUK’s Education Bond marks major milestone for UK FDI
Beijing, 4.30am GMT, December 2nd, 2016 – InvestUK today announces it has secured a major partnership agreement with Henry Global Consulting Group, one of China’s largest overseas property investors, to participate in InvestUK’s $1 billion Education Bond®, targeted at UK affordable housing.
The Education Bond is an innovative product that allows foreign students to invest in UK Affordable Housing with the yield on their investment providing them with a bursary to fund their tuition fees, a share in the investment profits, as well as entitlement to apply for UK indefinite leave to remain.
Henry Global has more than US$3 billion under management and invests up to US$50 million every month into USA and Canadian projects, particularly focusing on much-needed development in less affluent 'Target Employment’ Areas. The firm invests private client funds alongside its own assets.
This agreement represents the first time Henry Global has directed its Chinese outbound real estate investment programmes towards the UK.
InvestUK Chairman Rupert Gather, said: "This agreement with Henry Global is a milestone in Foreign Direct Investment into the UK, and a further vote of confidence in Britain's post-Brexit economy. We are delighted that Henry Global has selected InvestUK to be its UK investment partner and we look forward to working with them to fund Affordable Housing and the job creation that comes with it."
The agreement was signed today in Beijing at the 'Real Estate & Overseas Investment Summit', the largest conference of its type in China. It follows the launch last month of the Education Bond by InvestUK and Gaw Capital, an international private equity real estate firm based in Hong Kong.
£1bn property bond targets students seeking UK residency
07 November 2016
The InvestUK Bond looks to address the supply shortage of housing in the UK; where at least half of the bond will be invested in real estate-backed debt, including in the affordable housing sector, with the balance held in government debt.
InvestUK and Gaw Capital Partners have launched a £1bn bond that will invest in real estate-backed debt and is aimed at international students who will be able to use their investment to gain permanent residence in the UK. - Guy Montague-Jones
At least half of the bond will be invested in real estate-backed debt, including in the affordable housing sector, with the balance held in government debt.
International students will be able to apply for UK permanent residence after a five-year term of investment. However, only very wealthy students will be able to participate as the education bond has a minimum subscription price of £2m. Take-up expected to be high among Chinese students, who number about 70,000 in UK schools and universities.
The bond will look to address the supply shortage of housing in the UK. Initial projects in Derby and Kent are already under negotiation with one of the bond’s UK-based house building partners, Latis Homes.
Rupert Gather, chairman of InvestUK, which is an advisory business set up to help private clients from overseas invest in the UK, said: “The education bond is an innovative solution that addresses both the need to fund UK affordable housing, while continuing to attract world-class talent to the UK’s world-leading universities. It also provides a meaningful yield for the bondholder.”
“We are delighted to partner with InvestUK to launch this creative and innovative education bond which we believe is a smart and original way to gain residency while benefiting from an education angle,” added Christina Gaw, managing principal and head of capital markets, Gaw Capital Partners. “We intend to use our in-depth understanding of the UK real estate market based on our proven track record to safeguard the bond investment.”
Prefabs and Chinese Students Are U.K.’s New Homebuilding Gambit
07 November 2016
The UK may have an unlikely solution to its housing crisis: wealthy overseas students and pre-fabricated homes. In the Brexit hour, more comes to light than originally anticipated and InvestUK has set out to make the most of this nationwide opportunity.
Using the UK Investor Visa to fund national homes - John Ainger
The U.K. may have an unlikely solution to its housing crisis: wealthy overseas students and pre-fabricated homes.
InvestUK, a foreign direct investment adviser, and Hong Kong-based Gaw Capital Partners plan to raise 1 billion pounds from the sale of a bond and use some of the proceeds to finance property projects including affordable homes, the firms said in a statement. Overseas students who invest at least 2 million pounds ($2.46 million) will gain permanent residence after five years.
“We can offer some Chinese students what they want -- that is permanent residence when they graduate -- provided they invest in something the country actually needs,” Rupert Gather, chairman of InvestUK, said in an interview. “This is the future for affordable housing.”
The U.K. is only completing about half of the number of homes it needs, pushing up prices and rents. A portion of the money from the bond will be used to fund new pre-fabricated homes -- best known for their role in easing the country’s postwar housing shortage. The money raised will also be invested in gilts.
The bond plan will be announced on Thursday at a China-British Business Council conference in Shanghai. The yield from the securities will be used to fund the students’ tuition fees through bursaries.
The proposal would allow Chinese bondholders to study in the U.K. via a Tier 1 investor visa, usually the preserve of wealthy foreign nationals who invest in gilts or British companies. The number of wealthy investors granted visas to live in Britain fell 84 percent last year after the government doubled the minimum investment required for the permit to 2 million pounds in November 2014.
Relations between China and the U.K. have thawed since the government approved the so-called Hinkley Point plan, allowing Electricite de France SA and China General Nuclear Power Corp. to build two nuclear reactors in southwest England.
The affordable home investments show that the Chinese remain serious about forming new bonds with the U.K., according to CBBC Chairman James Sassoon.
We thank Cameron for Brexit openings, Chinese investors say
07 November 2016
Brexit may have shocked the world but it convinced Chinese investors to bulwark confidence in the UK and its policies. "It [UK] can now be more flexible and take its own, democratic route".
In this hour InvestUK has set up to attain a win for both nations:
The Times summary of Brexit's latest and UK's endeavours to make best - Calum MacLeod, Shanghai
"Brexit may have shocked the world but it convinced Hou Weijun, a Chinese businessman, to conclude a £20 million investment in an Edinburgh environmental project. “The traditional view is that Brexit is bad but I’m confident in the UK and its policies. It can now be more flexible and take its own, democratic route,” said Mr Hou, who has yet to visit the UK.
His upbeat assessment, music to Brexiteer ears, appears to be echoed by Chinese investors excited by the pound’s depreciation and the UK’s reputation for quality. “We thank Mr Cameron for Brexit, as that gives us an opportunity with companies like you,” one mainland Chinese financial investor told a British entrepreneur at the China Outbound conference in Shanghai.
Brexit represents opportunity, agreed Kenneth Xu, a senior director at Fosun Capital, part of one of China’s largest and most acquisitive private companies. Anticipating a “yes” vote, the Fosun Group swooped to buy the Championship football club Wolves in July. “We think the price is cheap,” said Mr Xu. The club “is already at the bottom, it cannot get any worse,” he said. “If we can do something to push it, help it go up, there’s big potential.”
“The Chinese understand a bargain,” Lord Sassoon, chairman of the China-Britain Business Council, said at the UK government-sponsored conference. They are also less Brexit-exposed than Japanese or other foreign investors with existing UK businesses and large manufacturing plants serving the EU market, he said.
Chinese investors “are interested in finding high-value engineering expertise, health expertise, creative ideas, then bringing them back to China to drive their own businesses up the value chain”, said Lord Sassoon, whose family built the Peace Hotel in Shanghai. “For that, nothing changes as a result of Brexit, other than [that] at the moment things are 20 per cent cheaper.”
Repeating the rosy rhetoric endorsed by David Cameron and President Xi during the latter’s UK state visit last year, Shang Yuying, a senior Shanghai official, told the conference that “in the golden era we need to bear golden fruit”.
China’s increasingly wealthy parents, determined to give their single children every career advantage, will deliver a win for both nations, said Rupert Gather, chairman of InvestUK, who launched a £1 billion Education Bond to raise low-cost capital to develop affordable housing in the UK.
“It’s a whole new way of attracting inward investment into the UK, using foreign students as the principlal source,” Mr Gather said. Up to 125 wealthy Chinese students a year for the next four years will each invest £2 million in exchange for permanent residence and tuition bursaries.
China is no longer just a market for UK firms; it also represents an important source of finance, said Mark Bernstein, founder of Leicester-based Wearable Technologies, which seeks Chinese licensing partners and investment for its industrial garments fitted with washable wifi networks. Company evaluations are believed to be much higher in the US and China, “so they think it’s cheap in the UK,” he said.
Mr Xu played down reports that his company was making a serious bid for the National Grid but said that it was targeting fashion, luxury and gene technology companies in the UK, and may consider another sporting takeover. Lander Sports Development, another Chinese conglomerate, plans to buy Southampton , according to Bloomberg yesterday.
“We always keep an eye on the UK but we’re waiting, we’re a hunter,” said Mr Xu. “We’re not in a rush. If an opportunity jumps out, we’ll catch it.”
InvestUK and Gaw Capital Partners Launch Innovative “Education Bond” for Chinese Students in the UK
03 November 2016
Bonds to raise up to £1 billion of UK inward investment for affordable housing and other priority infrastructure
Shanghai, 2.45am GMT, November 3, 2016 – InvestUK and Gaw Capital Partners today launched the “Education Bond,” an innovative investment product that allows Chinese and other international students to invest in the UK and gain Permanent Residence.
The programme is expected to raise up to £1 billion of foreign direct investment (FDI). At least half the bond will be invested in high-yield real estate-backed debt, with the balance held in UK Government bonds.
The funds raised with the Education Bond will be used to finance property-related projects in the UK, including in the affordable housing sector. The yield from these investments will fund bursaries to fund the student’s tuition fees.
Bondholders will be eligible to apply for UK ‘ILR’ (Permanent Residence) after a five-year term of the investment. The Education Bond has a minimum subscription price of £2 million, which would be invested after a Tier 1 (Investor) Visa is granted.
Around 70,000 Chinese students attend UK schools and universities every year.
Rupert Gather, chairman of InvestUK, said, “The Education Bond is an innovative solution that addresses both the need to fund UK affordable housing, while continuing to attract world-class talent to the UK’s world-leading universities. It also provides a meaningful yield for the bondholder. This is a win-win-win, and exactly the kind of creative product that Britain’s Migration Advisory Committee has been calling for. The Education Bond conforms with both the letter and spirit of the UK’s investment visa rules, while having a meaningful and measurable impact on Britain’s real economy.”
“We are delighted to partner with InvestUK to launch this creative and innovative Education Bond which we believe is a smart and original way to gain residency while benefiting from an education angle,” said Christina Gaw, Managing Principal and Head of Capital Markets, Gaw Capital Partners. “London is a key global gateway city with exceptional opportunities. The combination of attractive yield, top quality assets, coupled with attractive long-term debt, makes London a particularly compelling market for real estate investments. We intend to use our in-depth understanding of the UK real estate market based on our proven track record to safeguard the Bond investment.” Gaw Capital Partners has been providing separate account services in the UK market for a high caliber list of institutional investors since 2010.
Gaw Capital Partners and InvestUK will today sign a Memorandum of Understanding, and will subsequently form an investment committee to oversee the debt investments. One aspect of this major new initiative – with its investment in property-related and asset-backed projects in the UK – will contribute to addressing the supply shortage of affordable housing in the UK, estimated at over 1 million new homes needed over the next 5 years. This is a national programme, with initial projects in Derby and Kent already under negotiation with one of the Bond’s UK-based house building partners, Latis Homes.
According to Lyons Review, to keep up with the number of new households being formed, at least 243,000 homes a year must be built. In reality, the UK has only managed to deliver an average of 137,000 homes a year between 2004 and 2014.
The UK government is now tackling the supply shortage with Prime Minister promising to boost homebuilding. In addition to extra government spending, more institutional funding will flow into the affordable housing market.
InvestUK is a Foreign Direct Investment platform to help international private clients invest directly into UK companies.
InvestUK offers a leading advisory business, having managed over 115 direct private equity investments since it was founded in 2012, helping the UK to be the number one destination for FDI in Europe. It is a member of the UK Government’s Inward Investment Support Network and founder of the UK’s Foreign Direct Investment Awards.
For more information, please visit www.investuk.com
About Gaw Capital Partners
Gaw Capital Partners is a uniquely positioned private equity fund management company that focuses in real estate markets in greater China and other high barrier-to-entry markets globally.
Specializing in adding strategic value to under-utilized real estate through redesign and repositioning, the firm's investments span the entire spectrum of real estate sectors, including residential development, offices, retail malls, hospitality and logistics warehouses.
Gaw Capital Partners runs an integrated business model with its own in-house asset management operating platforms in retail, hospitality and property development.
Gaw Capital Partners has raised five real estate commingle funds targeting the Greater China and Asia Pacific region. Additionally, the firm manages opportunistic funds in Vietnam and the US along with a hospitality fund targeting the Pan Asia region. Gaw Capital also provides services for separate account direct investments in the global markets. Notable UK investments include the Lloyd’s building, Tower Place, Waterside Paddington, Vintners’ Place, Allen House, Exchange Tower, Milton Gate, Clerkenwell House and 123-151 Buckingham Palace Road in London.
Since its inception in 2005, Gaw Capital Partners has raised equity of USD$ 6.9 billion and commands assets of USD$ 12.7 billion under management.
For more details, please view: http://www.gawcapital.com
Tel: + 44 773 333 1928
Gaw Capital Partners
China-Britain Business Council
Tel: +86 10 85251111 Ext.363
InvestUK's EDUCATION BOND
02 November 2016
A smart new investment for international students to earn eligibility to Permanent Residence in the UK and have all their tuition fees paid for whilst they study:
A Western Awakening, "One Belt, One Road": Oxford Global Infrastructure Conference 2016
20 September 2016
Bridging the Infrastructure Gap: Global Integration and the “One Belt One Road” Initiative
Rupert Gather spoke at this year's OXIIC Global Infrastructure Conference; InvestUK collaborated with industry experts; geographers; economists; historians; academia; government; and international organisation representatives; culminating a blend of views on the potential of cross-boarder infrastructure initiatives. Such an idea backs the strategy and framework focus of Xi Jingping's "One Belt, One Road" proposal.
Conference speakers included Prof. Jim Hall, Weidong Liu, Prof. Gordon Clark, Peter Frankopan, Jim Rogers, Oliver Heiland, Prof. Emily Jones, and Sir Roger Gifford. Their commentary on the purpose of this year's event can be watched here.
"It's astonishing to me of how many people have never heard of the 'One Belt, One road'." - Jim Rogers
InvestUK's Executive Chairman's speech:
"Good afternoon - I am Rupert Gather, Chairman of InvestUK. I am delighted to speak at the conference and am particularly grateful to Yin Yang for inviting me. I have to say that I am under a great deal of pressure to get this right: my daughter is 17 years old and is applying read English at Oriel college here in Oxford next year and is worried that her chances might be affected with so many distinguished guests here today from the university. Her parting words yesterday were “whatever you do Daddy, don’t muck it up”…. Pressure!
InvestUK is, as its name suggests, a UK Foreign Direct Investment specialist, so my focus is essentially selfish - how building cooperation mechanisms for infrastructure investment and cross border businesses affects Britain. Although our name sounds governmental – think InvestHK who do a very similar job for Hong Kong – we are actually a private company acting for investors.
The market we operate in is critical for the UK economy. The UK receives net FDI inflows of £40 billion annually – representing one-third of total European Union inflows and making the UK the Number 1 destination in Europe. InvestUK is currently focused on New Investments (as distinct from follow on investments) and we estimate that this segment represents a total of £20 billion a year.
Being British we do of course have to view everything in the context of Brexit. The world in general is utterly perplexed by the decision of the British people and London and Oxford, which vote Remain by a 40% majority all the more so. The decisive issue was I believe different people’s view on Sovereignty. This is more emotional than rational thinking - and this is what shook the Establishment and the Pollsters. Many people make decisions not based on money or benefits, but based on what they think is important, and it very difficult for residents of a sophisticated international multicultural city like Oxford to understand that other people have a different perspective.
In general, we may consider the many benefits of globalization and the international infrastructure that comes with it as a blessing. But in fact, globalization has also brought negative consequences: for many people, globalization is a curse rather than a blessing: a curse to the environment, a curse to employment prospects and a curse to people’s understanding of what make a settled community.
Now that the people have voted in this way, then the government needs to react. I believe that short term instability is a price worth paying if this great opportunity to remodel our relationship with the world is not be wasted. The economist Joseph Schumpeter was never known for his modesty – he once famously said:
I set out to become the greatest lover in Vienna, the greatest horseman in Austria, and the greatest economist in the world. Alas, for the illusions of youth: as a horseman, I was never really first-rate
But he was absolutely correct when he observed:
We always plan too much and always think too little. We resent a call to thinking and hate unfamiliar argument that does not tally with what we already believe or would like to believe.
So we must do the thinking of Britain’s place in this new world order and in particular its relationship with China, which is overwhelmingly the biggest current and potential investor in UK infrastructure.
We should of course be concerned that The Global Times, a communist party controlled tabloid saying the a “Lose-Lose situation is already emerging” and reports in the Guardian saying that the vote robs the “golden relationship of its lustre”.
On the other hand, we have the view of Chinese Private Equity giant Sanpower Group. President Yue Li who told the China British Business Council Outbound Conference in Beijing that Sino-British trade relations will not be affected by referendum. What he said was rather interesting – he pointed out that China's trade strategy is to run through the lines, rather than blocks. The strategy of One Belt One Road places Britain is at the end of both these two trade routes. The Chinese are known for their pragmatism, as indeed are the British. So I have no doubt this vital bilateral relationship will prosper under this new reality.
This is of course all the more important because the key behind the One Belt One Road initiative lies within infrastructure investment.
Let us briefly understand what ‘Infrastructure’ is. I have been told that infrastructure is everything upon which the economic productivity of society depends. This can generally be equated to the movement of goods, water, energy and labour. The movement of labour, is of course more properly expressed as the movement of people. As the Brexit debate showed, it is this movement that is both the problem and the solution in the world.
The World Bank estimates that an additional 10% investment into infrastructure can increase GDP by 1% in the long run. Worldwide, infrastructure spending is expected to total more than $9 trillion by 2025, up from $4 trillion in 2012. Let’s just compare these numbers to get a sense for what they mean.
In 1998, the United States federal government had accumulated about $4 trillion in debt. By 2008, that number was at $9 trillion. That is about a 125% increase. Basically, - according to the World Bank’s statistic – if we take all of the debt money accumulated under former U.S. President George W. Bush, and invest that into infrastructure, we would have increased GDP by 12.5%!
Historically, infrastructure investment into the UK has been predominantly in the energy sector, with an outlook of £100bn into the sector by 2020. This type of infrastructure investment is also the most popular in many developing countries such as China, India, Brazil and Nigeria. This sort of spending has been increasing dramatically as many people in such nations look to move from rural areas into urban environments. Again we arrive to the movement of people.
Let me actually show you the OBOR route map again – not that it isn’t already engrained into your brains from seeing it all afternoon. The Red route we see is the “Silk Road Economic Belt” and the Blue is the “21st Century Maritime Silk Road.” One predominantly by land, and the other by sea. The Red route targets all major areas of trade starting from Europe to Russia, to Central Asia, to the China-Mongolia region, to the South China Sea, and circling back around through Indo-China, the Indian Subcontinent, the Middle East and Eastern Africa and the Mediterranean Sea. The Maritime route begins in Europe and sails through the Mediterranean to the Indian Ocean, the South China Sea and ending in the Oceania area in the Southern Pacific.
The UK has infrastructure investment to and from a network of European countries already such as France, Belgium, Holland, Ireland and Norway plus many more. A network like this is another asset along the One Belt On Road, providing access to more countries and more investment opportunities. If we take for example the EU countries if we look at what occurs between them on a trade basis, we can see the free flow of goods, and the free flow of investment. Let’s take the privatised rail networks in the UK for example. We can see the free flow of investment quite clearly. French state rail operator Kelios owns a 35% stake in The Southeastern Line and around 45% of the First TransPennine Express. Trains of course are another means of transport. They transport goods and people, and we all know what comes with the EU and the transport of people. But there it is again, the idea of the movement of people. Investment into the labour area of infrastructure is what will matter most, simply because people are the drivers of anything and everything in society. Under the OBOR initiative, business will unite all of the diverse regions and trading sectors. Kind of like the EU, but this might actually work.
As this segment is titled “Industry Demonstration and Implications” I want to finish by explaining a little about an infrastructure project that InvestUK is working on. I spoke earlier about how globalisation is seen by many as a curse. Part of this is down to the sense that Governments across the world appear to have lost control of the movement of people. In response Government need to engage with infrastructure spending at a human level. Spending £50billion on high speed rail HS2 in my view fails this test – it is too easily seen in tabloid terms as a vanity project, an expensive way of ferrying the wealthy around the country quicker and more luxuriously than before. A more practical and indeed more needed infrastructure project is to meet the shortage of housing for new and shifting populations. ‘Affordable Housing’ is an area at the very nexus of this debate and represents a huge infrastructure challenge for the UK.
Whilst the Government can create a ‘target’ – in this case 200,000 new units every year for 5 years or a million new affordable homes, this really amounts to a 1970’s Soviet plan for Tractor production in the Urals. It is utterly meaningless unless the market can be persuaded to deliver. If it doesn’t, then it will just join the long list of broken pledges and lead to disenchantment of the type shown in the Brexit vote.
Conventional wisdom tells us that you can only get the maths to stack up to build Affordable Housing if Government owned land is put into the equation for free or at least at low cost: simply put, it reduces the development cost by up to a third. The problem with this however is that Government doesn’t own large flat tracts of well drained and easily accessed land of the type that the big housebuilders prefer and institutional capital likes to back.
Government, by which we technically mean the Crown Estate, actually owns very little suitable land. The land that is available is split between numerous departments, agencies and NGOs such as NHS, MOD, Railtrack etc and the sites tend to be small, in awkward sizes and brownfield.
That said it has great potential for inward investors as it offers long term, sovereign-backed assets with stable cashflow. At InvestUK we have now agreed investment into one solution provided by a leading sustainable development housebuilder.
The big idea is to revolutionise the construction technique through designing modular housing units that can be factory built to the highest sustainable and energy efficient standards and simply assembled on site. Factories to build these units will be located in deprived areas (known as LSOAs) that are home to 5 million of the most economically deprived people in UK, thereby creating localised employment. An algorithm has been designed that will provide the optimal usage solution for housing units for all those difficult, hard-to-build-on sites. This simplifies the planning process and the decision process for all the landowners because they know exactly what they are getting.
Once the units are made they can transport these houses to the sites where they are assembled instead of being built in the field over a long stretch of time. Modular housing isn’t a new idea, but what is great about their model is the benefits that come from it, for infrastructure and for people. As Margaret Thatcher, one of Oxford University’s more famous (or infamous depending on your politics) alumna, said in a much misunderstood article:
there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people.
Rupert Gather spoke at this year's OXIIC Global Infrastructure Conference; InvestUK collaborated with industry experts, geographers, economists, historians, academia, government, and international organisation representatives, culminating a blend of views on the potential of cross-boarder infrastructure initiatives. Such an idea backs the strategy and framework focus of Xi Jingping's "One Belt, One Road" proposal.
The GCC on Economic Reform
01 September 2016
Economic Reform: the driver in building strong and balanced economy and sustainable growth’:
Rupert Gather addressed the 2nd Gulf Cooperation Council (‘GCC’)-British Economic Forum on Thursday 21st July at Lancaster House, London on the topic of ‘Economic Reform: the driver in building strong and balanced economy and sustainable growth’. The event was organized by the Arab-British Chamber of Commerce. Other speakers at the Forum included HRH The Duke of York, Rt Hon DR Liam Fox, Secretary of State for International Trade and HE Dr Abdullatif bin Rashid Al Zayanni, Secretary General of the GCC.
Eva Inglander (InvestUK) and Steve Berry of Waterbridge Capital.
Thomson Reuters & InvestUK on Brexit
16 August 2016
Why InvestUK still stand by their vote to leave.
InvestUK CEO, Rupert Gather, was interviewed on the Brexit Debate by Thomson Reuters on the 17th of June at the their Canary Wharf Studios. Rupert argued the private equity case for Brexit, suggesting that UK-China trade and investment would be unaffected or enhanced in this scenario. Rupert said he believed that the ‘One Belt One Road’ initiative was an inter-governmental not a China-EU concept, and that the Anglo-Sino relationship typified by the ‘Golden Era’ had greater significance for the future than any short term economic downside from Brexit.
EU Referendum: RT UK Interview with Rupert Gather, Invest UK
02 August 2016
Insight hour with Russia Today: