For an organization that has long made discretion and confidentiality points of policy, Zug-based private markets investment manager Partners Group sure has been visible of late.
In the past two months, PERENews.com has carried four big stories concerning its activities, including yesterday’s news of it growing a position in the $4 billion BlackRock Asia Fund III opportunity fund. Each one of these stories has been keenly read too, as evidenced by our most read list.
Recently a Partners staffer told PERE that, in fact, the firm would love to shout more about what it does. It regularly communicates its direct investments (albeit often with scant detail). However, the real estate secondaries market, where this week the firm rubberstamped its market-leading position (certainly by capital raised), is another matter.
Here, things are typically a lot more hush hush. That is because when it comes to secondaries, Partners usually seeks permission first from both the counterparty in an investment and also from the manager of the fund it seeks to buy into. Usually, either one or both say no to the publicity. That’s fair enough – after all, what LP wants to openly admit their original investment didn’t pan out as planned?
However, Partners has been pushing certain of its recent dealings into the open. And thanks to being able to position some of its transactions as a positive for all sides concerned, we now are better educated about the strategy behind last month’s investment in one of the Niam opportunistic fund in the Nordics, for example, or in the Trophy Property Development Fund in China the month prior.
By contrast, the building up of a $400 million position in BlackRock Asia Fund III might still be as sensitive for certain parties as it is positive for others. But in time it looks as though that vehicle might have a happy ending too, if the projections of an investment advisory committee report that we were made aware of last week transpire. Watch out for the November issue of PERE magazine for further insight on those.
More important than the boosting of the Partners brand is the impact that the publicizing of these transactions and capital raisings have for the marketplace itself. It is one thing for media like PERE to peddle research on the escalating transaction volumes circulated by groups like Partners or its rivals like Landmark Partners or Setter Capital. However, when the actual names of the vehicles being traded are better known and the scale of these transactions is more widely understood, the educational effect on the market is significant.
For one, to those ever-mounting pools of institutional capital desperate to be better positioned in private real estate it offers evidence that, just like the assets themselves, the funds that hold them are liquid and tradable. Crucially too, there are some significant deals to be done.
For instance, PERE learned that among the tranches of BlackRack Asia Fund III that Partners’ acquired were deals struck at a discount of almost 30 percent to the prevailing NAV. For high-grade, well-tenanted office space like Singapore's Asia Square – the main asset contained in the fund – that is seriously interesting.
If Partners’ nigh-on $2 billion fundraising for only its second real estate secondaries fund is anything to go by, many institutional investors already have received that message. Raising twice the amount originally targeted for a strategy still shrouded in so much secrecy is, frankly, remarkable.
Arguably – though perhaps not entirely fair to suggest – it might also speak to a lack of top-drawer options in the conventional private equity real estate fund space. Indeed, most of the top performing firms already have been well capitalized for their latest fund efforts.
To that point, it will be interesting to see how Partners' closest rival, Landmark, will be fairing. It too was seeking $1 billion originally for its latest fund and had raised $670 million as of last month. Certainly, the omens are strong. Newcomer Aberdeen Asset Management hit the €300 million hard cap for its debut fund in July in one indication of that. Likewise StepStone: following its recent purchase of Clairvue Capital Partners, another interesting story to follow.
“I suspect as this industry matures, there will be more comfort in terms of firms drip-feeding their deals into the market,” one real estate secondaries investment manager told PERE.
Signs of maturation have been there for a while. Now, Partners’ activities over the past two months, whether deliberately communicated or not, have played an important part in propelling this marketplace further from opacity and into transparency. When announcing its latest fundraising success, the firm noted it had screened more than $100 billion of prospective deals. That alone tells us there are plenty more stories to come from this space.