Ardian, the Paris-based private equity firm, has raised a quarter of the capital it is targeting for its latest private equity real estate fund, PERE can reveal.
According to a source familiar with the matter, its real estate arm has raised €300 million of equity for Ardian Real Estate Europe Fund III, the third in a fund series focused on investments in western Europe.
The vehicle is understood to have a fundraising target of approximately €1.2 billion, similar to the predecessor fund, which was closed at the start of last year. No hard-cap has yet been set, it is thought.
The source said a notable feature of the early fundraising was that it was backed predominantly by European investors at a time when institutions in the region are struggling to make new commitments to the asset class.
That chimes with a major takeaway from PERE’s 2023 Global Investor 100, of European investors dropping down the ranking following a lack of outlays and valuations eroding their equity exposures, as covered in an analysis published this week.
Subsequent fundraising for Fund III is expected to come from the Middle East, Asia and the US and a second closing is anticipated before the end of the year with a final closing next year.
The fundraising comes at a time when Ardian has completely deployed the capital of Fund II and has almost fully exited the investments of its 2018-vintage first fund, which attracted €740 million from investors.
Fund I is understood to have generated net returns of more than 10 percent from investments using conservative leverage believed to be no more than 50 percent loan-to-value across the vehicle. The fund’s strategy was a mix between core-plus and value-add.
While that was almost entirely exposed to the office sector, in line with the broader institutional sector, Ardian’s real estate business has gradually been diversifying the series into other sectors. Fund II had an approximately 80:20 split between office and office-led assets and mixed-use properties, including investments with significant residential components.
Fund III is expected to have an allocation split of 50:50 between the two property types and have a greater emphasis on transitional properties featuring significant conversion work to alternative uses.
Ardian regularly promotes its sustainability credentials and has been a keen marketer of its environmental and social impacting activities. With its asset repurposing focus, Ardian Real Estate Europe Fund III is understood to qualify as an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation – meaning it has sustainable investment or carbon emission reduction as its objective – considered currently rare in the industry.
Ardian declined to comment on its fundraising.
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