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Gaw Capital on cusp of record $1.8bn fundraise – Exclusive

The Hong Kong-based private equity real estate firm has pulled in $1.3bn for its fifth opportunity fund, plus another $500m in sidecar commitments.

Hong Kong-based private equity real estate firm Gaw Capital Partners is poised to break its fundraising record in a matter of weeks with a $1.8 billion haul, PERE can reveal.

The fundraising comprised a $1.3 billion final closing for its fifth Asian opportunity fund, Gaw Capital Real Estate Fund V, and another $500 million in sidecar commitments from investors.

It follows a first closing of $700 million last April, followed by a second at $890 million in August.

The capital raise is a further sign of how the market’s best performing firms are benefiting from queues of investors each time they launch a new investment vehicle. Contemporaries in Asia experiencing similar levels of demand include local rival Phoenix Property Investors and pan-Asia platforms CLSA Capital Partners and SC Capital Partners, as well as Japan-oriented firms PAG Real Estate and Fortress Investment Group.

Every Gaw Capital flagship fund has hit or exceeded its stated high-teen-to-low 20s IRR and close to 2x equity multiple targets with the exception of the $800 million, 2007-vintage Gateway Capital Real Estate Fund II, which returned 11.2 percent IRR and more than 1.9x equity multiple.

Gaw Capital originally considered targeting $1.5 billion for Fund V, but lowered that number following talks with investors with a view to increasing the amount of co-investment sidecars, increasingly a notable feature offered by the firm to attract big-ticket investors such as the larger US pension funds and sovereign wealth funds.

The fund’s strategy, like its predecessor vehicles, is to invest the lion’s share in scalable retail and commercial properties in China, this time around 70 percent of the capital. Within that allocation about 50 percent is expected to be deployed in the mainland and 20 percent in greater China, including Hong Kong. The remaining 30 percent of the capital is expected to be deployed in other Asian markets including Japan, Korea and Vietnam, all three countries featuring in the investment program of Fund IV, Gaw Capital’s first $1 billion-plus fund which closed in 2013.

It is understood that approximately $300 million of Fund V’s equity has been deployed so far.

Gaw Capital declined to comment.