Gaw bets on alternatives in its $2.2bn fund

Since it was launched in 2018, Fund VI has so far deployed 40 percent of its capital over 14 investments across both traditional and alternative asset classes.

Hong Kong-based private equity real estate firm Gaw Capital Partners is planning to build dedicated businesses in niche sectors such as education, healthcare, data centers, co-living and co-working concepts to grow alongside its $2.2 billion latest flagship fund, according to an announcement.

Gaw held a final close on $2.2 billion for Gaw Capital Real Estate Fund VI in December 2019. It also corralled a $800 million co-investment sidecar alongside the main fund.

A source close to the situation said the firm has so far deployed around 40 percent of the fund’s capital over 14 investments in both traditional and alternative property types.

According to the announcement, these investments include: residential buildings in Japan; internet data center developer platforms in China; retirement villages in Australia; an office asset in Singapore; a portfolio of 12 shopping malls in Hong Kong; and four premium office properties in Shanghai.

The firm declined to provide the details of each investment and the target allocation to alternatives in the latest fund.

Christina Gaw, the firm’s managing principal and head of capital markets, said in the release: “Our increased expansion into thematic platforms such as data centers, healthcare and education-related real estate platforms are very welcomed by our investors. These are followed by our successful execution in other existing thematic portfolios such as retail outlet malls and logistics.”

Traditional asset classes such as retail and office dominated the portfolio of the Gaw Capital Real Estate Fund V. The firm raised $1.3 billion for the main fund and $500 million from a sidecar vehicle in 2017.

Reeves Yan, head of capital markets, Hong Kong at CBRE, said: “In the future, we will see more capital flowing into alternative sectors from the traditional asset classes like offices and retail. Today, the trend of decentralization means corporates may not need large office space in the central business district and the growth of e-commerce also makes retailers occupying less space on high street shops.”

Modern logistics, such as niche sectors like data centers, is expected to benefit from the change of structural trends, according to CBRE research. The report also calls on investors to move away from cyclical investments towards these emerging sectors.