Composition Capital makes two Japanese commitments

The Europe- and Asia-focused fund of funds group keeps with its niche investment strategy by committing to two Japanese real estate fund managers with narrow focuses.

Composition Capital, the Amsterdam- and Hong Kong-based private equity real estate fund of funds management firm, has committed capital to two underlying funds focused on Japanese investments.

According to an announcement by the firm, Composition made the commitments through its second Asia-focused vehicle, Composition Asia Fund II, which is $171 million in size. Japan is among the fund of funds’ target countries, alongside Korea and China.

The firm declined to disclose the size of the commitments or the names of the underlying fund managers, but it did state that one was made to a manager focused on the senior living segment of Japan’s residential sector, while the other was made to manager that specialises in capital restructuring opportunities on existing income-producing residential properties in the greater Tokyo area.

While the Japanese market has seen values declining of late, exasperated by March’s earthquake and resulting tsunami, Composition said it remained committed to the country’s real estate markets, adding that it saw additional opportunities for its Asia fund of funds.

Bill Shaw, Asian fund director at Composition, said: “Japan has been through traumatic events this year, but activity continues in this recovery period. Japan remains one of the world’s largest economies, offering opportunities in many sectors.”

Shaw said the firm’s efforts would center on Japan’s office and residential sectors going forward, mirroring comments he made on stage at the PERE Forum: Asia conference in Hong Kong in February. At that event, he underlined the virtues of investing with more focused managers over those with wider remits, like pan-regional fund managers. He particularly promoted investing with first-time managers, which he said typically outperform those managers on fund vintage three or four.

Composition Capital Asia Fund II is expected to close with between eight and 10 underlying investments in non-listed Asia vehicles, according to company literature. These investments could be across private funds, joint ventures, co-investments or secondaries. It is targeting a return of at least 15 percent IRR net of taxes, fees and expenses.