The wealth management division of French bank BNP is aiming to raise as much as €1 billion this year to be deployed equally between private real estate and private equity funds and, according to Claire Roborel de Climens, global head of private and alternative investments at BNP Paribas Wealth Management, it already has raised “several hundreds of millions” already.
The bank has included a value-added private real estate fund on a short list of target commitments to be made on behalf of a high-net-worth investor base with a growing appetite for the asset class.
Besides the real estate value-added fund, a mid-market private equity fund featuring companies with EBITDAs of more than €50 million and a private equity technology-oriented vehicle will also feature on the list, she said.
The bank is seeking to aggregate commitments from investors with net worths of more than $5 million each, able to make commitments of at least $500,000 a time. According to a survey by the bank and Scorpio Partnership, the consultancy firm, the average high-net-worth investor has a combined allocation of 16.3 percent to private real estate and private equity and many are looking to increase this exposure in the future, often at the expense of their holdings in cash, fixed income and equities.
“I’m quite confident we’ll achieve this target given the interest we’ve seen so far”, de Climens told PERE. “Five years ago, we intended to be raising tens of millions and now we’re raising hundreds of millions.”
Indeed, according to the BNP/Scorpio survey of 337 investors, more than 70 percent intended to reinvest capital into private equity or private real estate in the near future. Click here see the results of the survey in full.
High-net-worth investors expect “double-digit” returns from their private equity and private real estate outlays, de Climens said. Given the higher risk associated with committing capital to a value-added fund, she explained such a commitment would complement an existing exposure to core real estate from direct and other types of lower yielding property types, such as REITs. “Value-added can only be accessed via closed funds,” she said, adding that the majority of investors rely on banks or advisors to access funds otherwise only available to institutional investors.
There was a proportional decrease in the percentage coming from pension funds and insurance companies – traditionally among the biggest institutional investor cohorts in the private real estate market – with these investors accounting for 45.5 percent, $72.63 billion of the total this year.