Aberdeen launches €500m Russia fund

The Stockholm-based fund manager has become the latest to announce a Russia-focused vehicle aiming to exploit refurbishment and value added opportunities, as well as forward funding deals and joint ventures with developers.

Aberdeen Property Investors is to raise target equity of €500 million ($709 million) for new vehicle, Aberdeen Property Fund Russia, in order to invest in commercial real estate across the country.

The 10-year closed ended fund will target all commercial asset classes in 13 cities including Moscow and St. Petersburg, according to the firm. It aims to invest in deals ranging from value-added to opportunistic and to deliver 14-18 percent annual net internal rate of return, including a dividend of 5-8 percent. First close is expected sometime in the fourth quarter of the year.

The fund launch follows the acquisition of a team from regional fund manager Baltic Property Trust earlier this year and the subsequent opening of an office in St. Petersburg.

Ole Dall-Hansen, previously director of fund raising and investor relations at Baltic Property Trust, is heading the team, which is working alongside existing Aberdeen investment managers based in Finland.

Dall-Hansen, whose new title is chief executive officer Aberdeen Property Investors Eastern Europe, said: “Russia is a fast growing economy with strong GDP growth. At the same time, Russian property is undervalued with large potential for property investments. The demand for office space is steadily increasing and a rising personal income means that the retail sector has seen a period of strong growth, which we expect to continue.”

Aberdeen is the latest to announce plans to invest in Russia. Finnish bank Evli recently launched EPI Russia I, while US firm J.E. Robert Companies raised €321 million with co- fund manager Alfa Capital Partners for the Marbleton Property Fund.

Ubbe Strihagen, international director at Aberdeen, said its team in St. Petersburg would identify opportunities.

It is the fourth fund launched by Aberdeen this year. This latest vehicle has been incorporated as a closed ended sub fund under a SICAV-FIS umbrella structure registered in Luxembourg.