Hong Kong-based private equity real estate firm Gaw Capital Partners has blasted past its previous $1 billion-plus capital raise with the first closing of its latest pan-Asia opportunity fund.
The firm has raised $1.3 billion for its sixth opportunity fund, Gateway Real Estate Fund VI, and another $650 million in co-investments, PERE can reveal. Around 80 percent of Fund VI’s first close amount came via re-ups from the firm’s existing investor base, according to one person familiar with the fundraise.
PERE understands the $1.95 billion first closing was held earlier this month. Gaw has set a hard-cap of $2 billion for the fund, which does not include whatever capital is raised for co-investments. A final close for the first quarter of 2019 is being targeted.
Gateway Real Estate Fund VI, which is yet to reach a final close, is already bigger than its predecessor, which closed on $1.3 billion, along with $500 million in sidecar commitments, last March.
With the latest fund, the firm is looking to further expand its investment exposure beyond Greater China. PERE understands that 50 percent of Fund VI will be invested in Greater China while the remaining half will be invested in select Asian markets. For Fund V, 30 percent was allocated to markets outside Greater China. The target markets for Fund VI include Japan, Korea, Australia, Singapore and Vietnam.
Gaw is the latest Asia-focused opportunistic real estate manager to break its own fundraising record this year, indicative of the growing investor demand for high risk/return vehicles with a demonstrable track record.
In August, BPEA Real Estate, the real estate arm of Baring Private Equity Asia, raised $1 billion for its second pan-Asia opportunity fund, which is three times the equity raised by the firm for its debut fund in 2015, excluding any co-investments. Then earlier in March, Blackstone closed the biggest closed-end real estate fund in Asia when it corralled $7.1 billion for Blackstone Real Estate Partners Asia II. Hong Kong-based Phoenix Property Partners is also in the market with its sixth Asia opportunistic fund, targeting to raise $900 million, PERE reported in February. If successful, Fund VI will be the firm’s biggest vehicle in its opportunistic series.
The appetite for higher risk and return investments this year mirrors the trend in 2017. Last year, around 48.7 percent of the total equity for closed-end real estate funds in Asia-Pacific was raised for opportunistic vehicles, 39.2 percent for value-add and 12.1 percent for core vehicles, according to the 2018 Capital Raising Survey published jointly by industry bodies ANREV, INREV and NCREIF.
Performance is one key driver. Opportunity funds in the region outperformed core and value-add vehicles in the first quarter of this year, according to ANREV’s quarterly index, based on participation by 95 funds in Asia-Pacific. Opportunity funds returned 3.89 percent in Q1 2018, compared to 1.04 percent generated by value-add funds and 2.42 percent by core funds.
Gaw declined to comment.