AREA launches first Malaysian industrial fund

The Employees Provident Fund of Malaysia (EPF) is the cornerstone investor in the $150 million industrial development fund.  

AREA, a Malaysia-based private equity real estate firm, has launched a $150 million industrial-focused real estate fund, the first fund of its kind in the country.

The Employees Provident Fund (EPF) of Malaysia is believed to be the cornerstone investor in The AREA Industrial Development Fund (AIDF-1). For EPF, the commitment marks the pension fund’s maiden industrial investment in Malaysia.

“The EPF’s commitment in AIDF forms part of the retirement fund’s forward strategy to increase exposure in real assets as part of our continuing diversification strategy. The logistics industry will be a key growth area for Malaysia and will be an area of focus for us in the long term,” said Datuk Shahril Ridza Ridzuan, chief executive officer of EPF.

The Canada Pension Plan Investment Board (CPPIB) and Sparinvest Properties Investors, a Danish real estate investment manager, are the other investors in the fund.

AIDF-1 is an opportunistic fund with an 8-year term that would be invested in the Grade A industrial development projects in Malaysia. The fund’s maiden investment will be in the development of a large high-end warehousing facility in Selangor built up of 1.6 million square feet of net lettable space, pegged to be one of the largest distribution centers in the country.

The warehousing facilities developed via the fund would cater to the increasing demand for quality distribution centers in the country.

In a ceremony organized for exchanging of documents between AREA and the investing partners last week, YB Dato’ Lee Chee Leong, the deputy minister of international trade and industry in Malaysia, said: “It is an important stage in the ‘re-industrialization’ of Malaysia through reinventing how we present our industrial estates to the FDI (Foreign Direct Investment) participants. It is time we capitalized on the fantastic infrastructure we have invested in the country from the time the first North-South highway was envisioned and realized in 1994. This long overdue initiative will in time help in the nation’s goal of becoming a fully developed country by 2020.”

Investment Marketing (IM) Asia, a Singapore-based placement agent, assisted AREA in capital raising.

AIDF-1 is the first private equity real estate fund launched by AREA. In addition to industrial and institutional real estate development and management, AREA also has an advisory arm called AREA Advisors that is believed to have advised EPF on its investments in Malaysia, Australia and Germany. The firm has offices in Singapore and Malaysia.