Hong Kong-headquartered private equity real estate firm Gaw Capital Partners has raised $3 billion for its latest flagship Asia-Pacific real estate fund, PERE has learned.
Gaw Capital has corralled over $2 billion in the main fund for Gateway Real Estate Fund VII, with the remaining $1 billion in capital coming from sidecars, according to PERE sources. It is understood the latest fundraise included a fairly even mix of institutional investors: 25 percent from North America, 35 percent from Europe and Middle East and 40 percent from Asia-Pacific.
Having launched during the pandemic, Fund VII is similar in size to its predecessor. Closed in 2019 with a total of $3 billion, Fund VI garnered $2.2 billion for its sixth flagship opportunity fund and another $800m for a co-investment sidecar. The fund reported a distributed to paid-in ratio of 0.05x and a total value to paid-in ratio of 1.35x as of September 2020, according to PERE data.
While Fund VII follows a similar opportunistic investment strategy as its predecessors in the series, the firm has included private credit investments for the first time in the latest fund. According to one of the sources, real estate credit accounts for around 30 percent of Fund VII’s existing investments, including several deals in Hong Kong and mainland China. The source told PERE that the Gateway series has always had the option to make private credit investments, but it was difficult to generate an opportunistic return of more than 15 percent under the previous low-interest rate environment.
Gaw Capital declined to comment on the details of the fund close and its investments.
Although this is the first time Gaw Capital is making private credit investments via its Gateway fund series, the Hong Kong-based firm started investing in real estate debt five years ago. It has invested in the US and Asia-Pacific with different capital sources including its own balance sheet, separately managed accounts, co-investments and other fund vehicles. In the past 18 months, Gaw is understood to have already deployed at least $1 billion in private credit in Greater China alone from different pockets of capital.
Apart from private debt, Fund VII will continue to focus on other real estate opportunities including office, retail, hospitality, industrial, data centers, life science properties as well as thematic platforms across the Asia-Pacific region, including Greater China, Japan, South Korea, Southeast Asia and India.
Prior to the final close, Gaw Capital corralled $1.2 billion in its first close for Fund VII in November 2021. Aside from the credit investments, the firm also acquired a logistics portfolio across the Greater Tokyo area, the Hyatt Regency Hotel in Tokyo, an outlet mall in Guangzhou and a life science park in Shanghai via the fund.
“We remain optimistic about the post-pandemic real estate market and are well-positioned to seize opportunities that arise. The opportunistic theme-driven investments into sectors such as life science platforms, data centers and logistics warehouses have received a positive response from our investors. In addition, the private credit deals also offer attractive opportunities to institutional investors despite the current inflationary pressure, rising interest rates and potential recession risks,” Christina Gaw, managing principal, global head of capital markets and co-chair of alternative investments at Gaw Capital, said in a release.
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