China's foreign-exchange regulator has been actively but discreetly investing in U.K. property and infrastructure, marking a significant shift in how the secretive manager of the world's largest foreign-currency reserves uses its funds.

Since May, U.K.-registered Gingko Tree Investment Ltd., a wholly owned unit of China's State Administration of Foreign Exchange, has invested more than $1.6 billion in at least four deals, including a water utility, student housing, and office buildings in London and Manchester, according to data providers that track property deals and disclosures by the companies that received the investments. People familiar with Gingko Tree say there have been other deals, but the details haven't been disclosed publicly.

In recent years SAFE, which is responsible for investing most of China's $3.31 trillion worth of foreign-exchange reserves, has branched out beyond its traditional role of simply parking that wealth in low-risk government bonds, and has allocated a small portion to listed stocks and even private equity. It has mainly kept a low profile, taking very small positions in blue-chip stocks or allocating funds to third-party asset managers to invest on its behalf.

But SAFE's recent U.K. investments signal a new willingness to take significant direct ownership stakes, following in the footsteps of China Investment Corp., the better-known investor of Beijing's sovereign wealth.

In the biggest of the four deals, U.K.-based Gingko Tree last month bought a 40% stake in UPP Group Holdings Ltd., a major provider of university accommodation in Britain, from Barclays Capital Inc. Gingko Tree paid £550 million ($834 million at today's exchange rate) for the stake, according to Dealogic, a data provider. The Chinese investor has appointed two non-executive directors to UPP's board, according to one of the people familiar with Gingko Tree.

Gingko Tree also holds a 10% stake in the consortium that paid £1.236 billion to take over Veolia Water Central Ltd. in July, according to the water utility. Veolia Water Central has since changed its name to Affinity Water Ltd.

The Chinese investor has also been buying property. It took a 49% stake in Manchester office building One Angel Square for about $110 million in December, and in May it paid $438.2 million for Drapers Gardens, a 16-story office building in London, according to Real Capital Analytics, a New York-based property research firm.
 

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