ARA Asset Management makes inroads into $1bn fundraising

Singapore-based real estate fund management company ARA Asset Management is on course to raise half of its $1 billion equity target for its second opportunity fund, ARA Asia Dragon Fund II.

According to a filing made to the Securities and Exchange Commission (SEC), the firm, better known for its listed REIT series, has raised $300 million from two investors for the fund for which it aims ultimately to raise $1 billion. It is believed that a second closing of $200 million is expected to occur at the end of November.

While the SEC filing does not reveal the names of those investors to have made the commitments, PERE understands that $200 million of that capital was committed by the Teacher Retirement System of Texas which had included ARA on a list of ‘premier’ managers with which to partner. ARA is one of few Asia managers on the widely-coveted pension fund’s list. Other firms on its list include The Blackstone Group, Brockton Capital, The Carlyle Group and Colony Capital.

PERE revealed ARA’s plans to raise a second Asia opportunity fund in May. The vehicle was brought to market after the firm had invested 80 percent of the $1.13 billion of equity raised for predecessor fund ARA Asia Dragon Fund I which was raised three years ago and to which the Teacher Retirement System of Texas committed $100 million, according to data provider PERE Connect.Other US institutions to have committed to ARA’s first fund included California Public Employees’ Retirement System, California State Teachers’ Retirement System, the New Jersey Division of Investment, New York Fire Department Pension fund and the New York City Police Pension Fund and some of these are expected to make repeat commitments to the second fund. 

At that time the fund had invested in 10 properties across the office, retail and residential sectors of mainland China, Hong Kong, Singapore and Malaysia and according to the was “more or less” on track to deliver its target return of 20 percent IRR, before fees, and a 1.92x equity multiple. Probitas Partners is acting as placement agent for ARA’s fundraising efforts, the SEC filing revealed.

ARA Asset Management had S$18.8 billion (€10.8 billion; $15.3 billion) of assets under management as of 30 June, of which the assets of its private real estate funds were valued at $4.7 billion. The private real estate funds are led by chief executive officer Ng Beng Tiong.