Alpha Investment Partners (AIP), the real estate investment arm of Singapore-based developer Keppel Land, has held a final close on its Alpha Asia Macro Trends Fund II on $1.65 billion, equal to the largest capital haul for private real estate in Asia since the start of the global financial crisis in 2008. The capital raising also far exceeded the original $1 billion target that Alpha had set for the vehicle.
Alpha's fundraising equals the JPY130 billion raised by Fortress Investment Group for its second Japan fund last year, although the slide of the yen has seen that fund's dollar value decrease since. Of all the Asia-focused funds currently in market, only The Blackstone Group's Blackstone Real Estate Partners Asia is expected to be bigger, with a target of $3.5 billion. Blackstone held a first close for that fund on $1.5 billion last month.
Asian private equity real estate has seen a pick-up in international institutional investors committing to funds in the region of late as increasing numbers tune back into the region's growth story. Up to the end of June, $3.33 billion had been collected for Asia-focused vehicles, according to PERE's Research and Analytics division, compared to all of 2012, when $5.27 billion was raised.
AIP raised the capital from 17 institutional investors globally, half of which were from Europe, according to Christina Tan, managing director of AIP. Investors included sovereign wealth funds, pension plans, endowments and insurance companies. Although AIP declined to name of any of the investors, it did confirm that parent company Keppel Land committed approximately $100 million to the fund.
Asia Macro Trends Fund II was launched in the second half of 2011 and held a first close on $460 million that September. For the fund, AIP will be targeting an IRR in the mid-teens and a 1.8x equity multiple or above, Tan told PERE. The fund’s primary countries of focus will be the developed Asian markets of Singapore, Hong Kong, Taiwan, Korea and Japan, as well as China and India. The fund has a 60 percent leverage target, which gives it an investment capacity of $4 billion, he added.
AIP was preparing to close the fund at the end of last year when it was approached by a number of new investors asking to join the fund. Needing time to do due diligence, AIP requested an extension for the fundraising period and the current investors were happy to grant it.
“We were really well supported by existing investors, and they were the ones to introduce us to a number of new investors,” Tan said. “For a number of them, this is their first ever commitment to Asia.” Ultimately, 70 percent of the fund’s capital came from 11 investors with which AIP had a previous relationship, and 30 percent came from six investors new to AIP.
At the time of closing, Asia Macro Trends Fund II already had deployed one third of its committed capital in five deals, according to data provided by AIP. In February, the fund entered into a $300 million joint venture with Keppel Land to acquire Jinqiao mall in Shanghai.
AIP's previous fund, the $1.18 billion Asia Macro Trends Fund I, which was raised in 2008, has made nine exits out of 21 investments and returned 51 percent of capital to investors, Tan noted. Returns on investments have ranged between 27.5 percent and 39 percent and equity multiples of between 1.6x and 2.2x, according to the firm. Divested assets include a mixed-use commercial and retail development in Shanghai, a portfolio of serviced apartments in Hong Kong and an office building in Seoul’s Gangnam Business District. In all, AIP has S$10.6 billion (€6.5 billion; $8.3 billion) in assets under management on a fully invested basis.