Gaw Capital increases Fund III equity to $423m

The Hong Kong private equity real estate firm has attracted a further $50m to its $373.5 million Gateway China Real Estate Fund III. The fund’s focus is on Greater China although the vehicle does have an allocation to Southeast Asia also.

Gaw Capital Partners, the Hong Kong-based private equity real estate firm, has increased the final equity closing of its third opportunity fund to $423.5 million.

More than five months on from its official final closing, Gaw has been able to add a further $50 million of equity to its Gateway China Real Estate fund III vehicle, which will be used to invest predominantly in Greater China.

The firm would not comment on fundraising but PERE understands it received approvals from the fund’s original LPs, comprising US endowments, pension funds, sovereign wealth funds and multi-family offices, before allowing the late investor in.

The fund was launched in 2008 with a much larger equity raising expectation however worsened sentiment from investors towards private equity real estate funds following the global economic downturn made fundraising more difficult.

Despite that, Gaw Capital was one of a small handful of firms to successfully raise any capital from international investors for a China strategy.

The firm is expected to invest up to 70 percent of the capital into Greater China’s second and third tier cities, particularly into residential investments where it notes ‘unprecedented opportunities’.

Unlike in its previous funds, it is not expected to invest in China’s major cities like Shanghai, Beijing and Hong Kong where yields have become unattractive for such opportunistic businesses.

The fund, which can also be invested up to 30 percent in Vietnam and Singapore, is expected to generate an IRR of approximately 20 percent.

PERE travelled to Hong Kong late last year to interview Goodwin Gaw, founder of Gaw Capital Partners on the firm’s future investing strategy. To learn what he said, see next month’s issue of PERE magazine.