Citi cancels $1bn Asia fund, hands $400m back to investors

Citi Property Investors has abandoned efforts to raise a follow-on fund to its 2007 Asia focused vehicle and has decided to give back approximately $400 million to investors.

Citi Property Investors has cancelled equity raising for its second dedicated Asia real estate opportunity fund and has agreed to hand approximately $400 million back to investors.

The equity raised for the CPI Capital Partners Asia Pacific II fund is to be handed back to an investor pool principally made up of European and US institutional investors by the autumn, according to sources close to the matter.

The firm will now focus its immediate strategy for Asia on managing existing assets in its first fund, CPI Capital Partners Asia Pacific Fund, which closed on $1.29 billion in February 2007.

CPI was hoping to raise approximately $1 billion in equity for its follow-on vehicle and had started raising the capital in early 2008.

It held a first close last June, but after investor sentiment soured following the collapse of Lehman Brothers and Bear Stearns, the firm found it harder to add to its equity total.

The final close of the fund was due to be held later this year.

Last month, CPI parted company with David Schaefer, CPI’s head of Asia Pacific Investments, who was responsible for growing the Asia platform. He has been replaced on a temporary basis by CPI’s head of India, Ravi Hansoty.

CPI would not comment.