EXCLUSIVE: Invesco launches debut Euro value-add fund

Invesco Real Estate is to offer its clients a pan-European value-add fund for the first time, complementing the global firm’s existing offers in the US and Asia, sister publication REC has revealed.

Invesco Real Estate, the US fund manager, has launched its first pan-European value-add strategy investment fund, according to PERE's sister publication, Real Estate Capital.

Invesco is believed to have begun fund-raising for the maiden European Value Add Fund, targetting equity of €300 million to €400 million from both existing and new investors. The investment manager normally keeps the number of institutional investors in its European funds to a select group of six to 15.

It is thought the team that will manage the fund, led by Kevin Grundy, has already lined up a first asset to take to investment committee. Countries that it will invest in include Spain, Italy and Poland where Invesco has existing offices.

Simon Redman, head of product development in Europe, declined to comment on fundraising but said that Invesco has an existing track record of making value add investments for separate account clients going back 18 years.

The new fund also builds on Invesco’s acquisition last April of an eight-strong team from private equity firm Doughty Hanson, led by Grundy.

Invesco entered into a management agreement for part of Doughty Hanson’s European Real Estate II business and took on the team, who are based in London, Madrid and Milan.

Doughty decided to focus on its core private equity business after the death of co-founder Nigel Doughty but remains the general partner in that fund.

The second Doughty Hanson European Real Estate II fund has achieved top quartile returns. Fund 1, which was raised back in 2000 was fully realised with a 4.1x multiple, equating to a gross IRR of 42%.

It is thought the new Invesco fund will be focused on slightly smaller deals than some of its pan-European competitors, from €5 million -to €10 million of equity up to €50 million.

Invesco’s other new area of expansion in Europe this year has been into multi-family housing with an ambition to build up a £1 billion private rental sector portfolio. After hiring John German from Grosvenor, the firm has made investments in Germany on behalf of a club of German institutional investors and in the UK for two pension funds.