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Gaw Capital close to $1bn target

The Hong Kong-based private equity real estate firm has now increased the capital pile of its fourth China opportunity fund to $933 million and there are two more investors poised to come in.

Gaw Capital Partners has brought the capital haul of its fourth fund to $933 million after a fourth interim closing, putting the firm on track to hit its $1 billion hard cap before the end of October, PERE can reveal.

It is understood that the Hong Kong-based private equity real estate firm is waiting on two more LP commitments before bringing the curtain down on its capital raising for its Gateway Real Estate IV fund. When they are on board the number of institutional investors in the fund is expected to have reached 20. Among them are pension funds and sovereign wealth funds from around the world. 

At this point, about half of the capital committed to Gateway IV comes from institutional investors new to Gaw Capital, while the other half has been provided by investors re-upping from its previous funds.

It is understood that such was the appetite for this vehicle among investors, Gaw Capital was able to take its own $25 million GP commitment out of its fundraising count in order to include certain investors and yet remain within its $1 billion hard cap. And, while $1 billion is the hard cap for the fund itself, Gaw Capital has also been able to corral capital for co-investments and that is likely to bring the total capital in or connected to this vehicle closer to $1.2 billion. All of the fund’s investments so far are understood to have involved varying amounts of co-investment capital.

Gaw Capital has completed four deals out of Gateway IV thus far and is thought to be in advanced stages on two more. With the co-investment money factored into the deals, about one third of the fund’s currently committed capital is now invested.

Gaw is targeting investments in existing commercial properties, including offices and retail properties as well as hotels that need repositioning or redevelopment. The new development proportion of its strategy is expected to be residential, and reflect no more than 30 percent of the portfolio once all the capital is deployed. The risk profiles of many of the properties would be considered value-added, although some could be profiled as core-plus in nature. Ultimately, Gaw Capital is targeting 20 percent IRRs and a 2x equity multiple from the fund’s investments, in common with many China-focused real estate funds.

Gaw Capital is one of the many Asian real estate funds to benefit from improved sentiment towards Asian real estate among global institutional investors. This summer has seen a number of successful capital raises from investment managers in the region. In June, Gaw Capital’s Hong Kong neighbor CITIC Capital announced a $683 million final closing for its CITIC Capital China Retail Properties Investment Fund. Tokyo-based Secured Capital has also brought its Fund V to $450 million, and PERE also revealed that Singapore-based Alpha Investment Partners closed on the region’s equal largest capital haul since the start of the financial crisis with its $1.65 billion second fund. Further, Mapletree Investments looks set to raise the largest China real estate opportunity fund on record, having held a $1.1 billion first close in July.