Aberdeen closes first Asian property fund of funds at $600m, launches a second

Aberdeen Property Investors has held a final close for AIPP Asia, its first Asian fund of funds vehicle, at $600 million (€440 million).

AIPP Asia was launched in October 2006 with $91 million of equity commitments. Its lead investors included the Swedish groups Folksam and Handelsbanken Liv and the Finnish group Ilmarinen. Since that time a further $509 million has been raised, and the fund has been capped at its target size of $600 million.

Bo Ljunglöf, fund manager of AIPP Asia, said the fund received commitments from 15 institutional investors in the Netherlands, Switzerland, Ireland, Denmark, Finland, Norway and Sweden. He said the fund has so far invested in six target funds.

As a follow-up, Stockholm-based Aberdeen also revealed the launch of AIPP Asia Select, which will have the same remit as the first.

Both the original fund and its follow-up are managed by Aberdeen Property Investors Indirect Investment Management. Both are being managed by Ljunglöf along with Kang Puay Ju. Kang was previously at Dutch pension fund ABP, where she helped establish its Asian real estate platform. Prior to that, she was a vice president at GIC Real Estate, the property arm of the government of Singapore’s investment division. She is based in Singapore.

The pan-Asia Pacific funds aim to give investors a net annual internal rate of return of between 13 and 17 percent leading to an annual distribution of 4 percent. In addition to its fund investment, the fund may also undertake co-investments and joint ventures, which fit with its overall strategy.

“Although the fund has not been widely marketed yet, a number of investors have expressed an interest in it,” said Ljunglöf. “The Fund received initial seed capital from an institutional lead investor at an early stage and a next closing is planned in October.”

Ljunglöf added that the two differences between the new fund and the first fund are that it has been specified that leverage for this vehicle will not exceed 75 percent, and this fund will have a lifespan of 10 years rather than the twelve for the first fund.

Last year, Aberdeen launched the first and largest pooled fund of funds focused on Europe. That vehicle raised €624 million.

Aberdeen Property Investors has more then €9 billion invested on behalf of its institutional clients. Its parent, Aberdeen Asset Management, is quoted on the London Stock Exchange and has more than €100 billion in assets, including €20 billion managed from the firm’s office in Singapore.