European firm, Aberdeen Asset Management, is to start fundraising for an Asia fund of funds – its first since the credit crunch – hoping to corral up to $400 million of equity from institutional investors.
Revealing the plan to PERE today, Aberdeen said target gearing would be 50 – 60 percent and returns in the region of 13 – 17 percent per year.
This will be the third in the series of fund of funds in the Asia Pacific region that Aberdeen has raised, but perhaps more significantly the first since the financial crisis began in 2008.
Aberdeen raised its first ever Asia Pacific fund of funds in 2006 and quickly followed up with another in 2007, which it closed on $600 million. Both funds recently achieved full commitment.
The latest offering will be managed by a team of five professionals based in Singapore under Puay Ju Kang, head of property, Asia Pacific.
“It is our first attempt at fundraising post-crisis,” said Puay Ju in a telephone interview today, adding that the fundraising effort would target a larger network of clients than previous vehicles.
European investors primarily made up the largest grouping of LPs in prior funds, but Aberdeen will also look towards North America and Australia this time around.
The fund of funds will continue to be skewed towards local real estate managers with “specific skill sets”, with the bulk of exposure being to single-sector or single-market funds. Aberdeen has only ever invested in one pan-Asia fund. The team will continue to favour off-market opportunities like club deals and joint ventures where it can exercise greater control.
The first two funds in aggregate were overweight Singapore and underweight Japan, where there is a significant exposure to niche sectors like healthcare. Sector wise, the funds have been overweight retail.
Puay Ju added the firm was keeping the fees it charges identical to previous efforts – charging a flat fee and an incentive component. The only difference is that the firm might introduce a new slightly lower level fee tier for larger ticket-sized investors. “We recognize that larger ticket-sizes are harder to come by and we do want to show our appreciation for those investors prepared to put those larger ticket sizes with us,” she said.
Jon Lekander, Aberdeen’s global head of indirect property, added: “With this latest product, we further affirm our belief in the investment opportunities in Asia and our ability to make the best of them.”
Hugh Young, managing director of Aberdeen Asia said the firm had built a substantial specialist equity business and a fixed income business over the past twenty years, so property stood as the next asset class “ripe for expansion”.
The firm is up against competition from the likes of ING Real Estate Investment Management and Franklin Templeton, both of which are raising Asia fund of funds products.