Aberdeen Asset Management, the global asset management firm, has raised $472 million for and alongside its third Asia real estate fund of funds.
PERE has learned the firm has raised an initial $242 million for its Aberdeen Asia Fund of Funds III, a 10-year multi-manager vehicle led out of Singapore by the firm’s head of Asia Puay Ju Kang. Aberdeen has also raised $230 million for side-car coinvestments made alongside the fund. Both pots of capital have come from predominantly European institutional investors.
The capital raised for the fund of funds was raised on a discretionary basis – meaning Aberdeen has autonomy over how it is invested. The equity raised for coinvestments was raised on a non-discretionary basis meaning the investors who committed that capital have approval rights on investments.
Jon Lekander, Aberdeen’s global head of indirect investments, said: “This comes back to a wider trend we’ve seen in club deals. A lot of investors want a broad-based strategy but they also want to tilt their portfolio when they find something that particularly appeals to them. For us, [the extra capital] is beneficial as it gives us extra bargaining power.”
Aberdeen Asia Fund of Funds III is ultimately expected to attract $400 million from Aberdeen’s investors although the fund of funds has been assigned a hard cap of $600 million. Capital raising is due to continue for another year after which the vehicle is to embark on a three-year investment period, similar to other funds of funds in the real estate asset class.
In terms of strategy, Aberdeen expects it to broadly resemble that of its first Asia fund of funds, which attracted $600 million in 2007 and is now fully deployed. The firm’s second Asia fund of funds closed on $200 million in 2009 albeit in historically awful capital raising conditions shortly after the start of the global financial crisis.
“The underlying strategy for all of our strategies are one and the same – the Asia growth story and the increased importance of Asia in the global economy,” he said.
While Aberdeen Asia Fund of Funds III has no official weighting requirements, the firm is predominantly targeting underlying funds focused on Asia’s mature real estate markets including Japan, Australia, Hong Kong and Singapore. “Those are the largest and deepest markets,” Lekander said adding that coinvestments made with the fund’s capital, investments in the vehicles of start-up fund managers and secondaries investments were also possible.
Lekander also said that, typically, the fund of funds would invest in the funds of underlying managers for which gearing levels of between 40 percent and 75 percent loan to value is deployed. The fund is expected to generate an IRR of between 13 percent and 17 percent from its investments. Aberdeen is not using a placement agent to help it raise capital