Invesco completes takeover of AIG’s $5.4bn Asia RE business

The Atlanta-based investment group has increased assets under management in Asia twelvefold in a transaction that sees it inherit $5.4 billion of assets and a 65-person strong team.

Atlanta-based investment giant Invesco has become a major force in Asian private equity real estate following the completion of its takeover of AIG Global Real Estate’s Asia business.

The completed deal, first tipped by PERE in November, means its real estate division, Invesco Real Estate, has increased its assets under management in Asia twelvefold from less than $500 million to almost $6 billion.

Neither party formerly announced the deal but Invesco confirmed its conclusion in its fourth quarter results, adding the transaction enabled it to add $5.4 billion of assets to its alternative assets exposure. The deal also played a significant part in increasing the group’s total assets under management at December 31, 2010 to $616.5 billion up $12 billion from the quarter before.

It is a huge step change for Invesco, which entered the region in 2006 through the hire of managing director Cheng-Soon Lau from Ayala International.

The amount paid for the platform has not been disclosed however a subsequent report by Reuters suggested it changed hands for “tens of millions (of dollars)”.

AIG’s Asia Real Estate business has managed eight funds since inception including strategies ranging from India and Japan to pan-regional investing and from core to opportunistic. It would include the AIG Asia Real Estate Partners funds series, the latest of which, AIG Asian Real Estate Partners II, closed on $740 million of equity in September 2008, but remains largely uninvested.

PERE understands a significant factor behind the takeover of the platform was the support from the investors of the fund, thought to include US pension fund San Diego City Employees Retirement System, the National Pension Service of Korea and the investment office of the Kwok family, the family behind one of Hong Kong’s largest real estate companies Sun Hung Kai Properties.

Whether Invesco’s real estate investing strategy evolves following the takeover remains to be seen. According to company literature, Invesco’s Asia real estate strategies focus on value-added private real estate investments with an initial focus on China and Japan, a secondary focus on Singapore and Hong Kong and a sector focus on industrial, retail and offices. AIG had significant exposure to many of these markets.

Invesco will also inherit a team of approximately 65 staff led by Graeme Torre, who is based in Hong Kong. Most of the staff, including Torre are expected to join Invesco, although there have been departures in the lead up to the sale. In September Millie Lau, a senior investment executive left to join the Asia platform of London-based Invista Real Estate.

AIG placed its global real estate investment business on the market in 2009 as the battled insurer sought to repay $20 billion of Federal Reserve Bank of New York money having been kept alive by the US taxpayer in September 2008 with an initial $85 billion bailout. As part of a mammoth restructuring plan, AIG has announced a raft of money-raising sales and other initiatives that included sales of various regional headquarter buildings.