APG, Ivanhoé-backed proptech fund to close at $200m

Australia’s Taronga Ventures has received commitments from 13 institutional investors for its debut vehicle, which is expected to hit its hard-cap.

Australian proptech manager Taronga Ventures has brought its debut proptech fund to $170 million as more global institutional investors are incorporating ESG-related technology in their portfolios.

It is understood that the firm aims to close RealTech Ventures I at its hard-cap of $200 million in April – far exceeding its original target of $50 million.

RTV1 invests in global emerging technology companies that have relevance for the Asia-Pacific region, with a strong focus on sustainable and clean technology companies. Launched in April 2020, PERE can reveal that half of the fund’s capital was deployed or committed as of December 2021. The vehicle has a return target of over 25 percent.

The vehicle’s focus on the ESG space has attracted a total of 13 investors, including Canada’s Ivanhoé Cambridge and Dutch pension fund manager APG Asset Management. In February, the two committed an undisclosed amount of capital, marking their first proptech investments in Asia-Pacific.

Taronga declined to comment on the fundraising details of RTV1.

Jonathan Hannam, co-founder and managing director of Taronga Ventures, told PERE that most deals he sees at the moment are climate- and ESG-oriented. “Around 85 to 90 percent of our portfolio has an ESG impact because the institutional investors are very focused on that space. We can see over time RTV1 will be a fully ESG type of fund,” he said.

In addition to funding Taronga’s debut fund, both APG and Ivanhoé Cambridge will become partners in Taronga Ventures’ ESG Impact innovation program. The program supports the adoption of best-in-class ESG technologies and innovations that drive “real and measurable change”.

George Agethen, co-head of Asia Pacific at Ivanhoé Cambridge, told PERE that the investor invests in proptech for financial return as well as the “quality, sustainability and resilience” of the return. He believes sustainability and technology go hand in hand and these are critical in affecting the value of real estate moving forward. Prior to investing in proptech in Asia, the firm invested in North American proptech funds launched by MetaProp, Round Hill Ventures and Green Point. It is also the single largest investor in Fifth Wall and the first investor in Fifth Wall’s Climate Tech Fund.

“The ecosystem has been less mature in Asia Pacific but it is catching up fast,” said Agethen, referring to proptech managers targeting institutional investors, which are fiduciary and easy for them to invest with. “The institutionally managed funds are still at infancy and sit very much in the venture capital bucket. In this case, Taronga has done a great job to explain why its product is relevant for real estate,” he added.