Catalyst raises first capital for Fund II

Catalyst Capital, the London-based private equity real estate firm, has raised €150 million in a first closing for Catalyst European Property Fund (CEPF II), its second pan-European property fund, it has announced.

The firm said it had raised equity from institutions including US and European pension funds, endowments, funds of funds, family offices and wealth management firms, some of which were investors in its first fund, Catalyst European Property Fund I (CEPF I). That fund attracted €228.5 million in 2009.

PERE revealed in April 2013 that Catalyst had launched its second fund. At the time, the firm was understood to have been targeting around €150 million for the fund and another €450 million for co-investment sidecars.

It is since thought to have revised the vehicle’s structure and is understood now to be aiming to raise as much as €400 million for the fund itself.

In its announcement, the firm said the vehicle’s ultimate firepower could be as much as €1.25 billion, when leverage is taken into account.

Catalyst further said that almost half of the initial equity commitments have been deployed into three transactions in the UK and in Europe.

The firm’s investment strategy for the fund carries a value-add risk and return profile. Catalyst aims to deploy its capital into investments in the UK, France, Belgium, Germany and Poland and into transactions where it believes it can create value and ‘capitalize on the market dislocation between prime and secondary assets.’ Within that spectrum, the firm is expected to acquire properties that are income-producing as well as developments and properties that require refurbishment.

Julian Newiss, the firm’s founding partner, said, among other areas, that non-performing loans would be a catalyst for investment opportunity. He said: “We believe the current environment provides an excellent opportunity to generate strong returns. The volume of European distressed property loan sales coming onto the market has never been higher and is set to continue as a result of the European Central Bank’s Asset Quality Review.”

“These assets will benefit from Catalyst’s in-house asset management skills and understanding of local markets to create value for the fund’s investors.”