Invesco launches first Asia funds after AIG acquisition

Invesco Real Estate has launched its first two real estate investment funds in Asia since ramping up its business in the region through the purchase of a platform from embattled insurer American International Group (AIG) in 2011.

PERE can reveal the firm has launched Invesco Asia Real Estate Partners III, a blind pool, closed-ended, commingled, opportunity fund for high returning investments in markets including Japan, Australia and China.

The firm is targeting $800 million for the eight-year fund through which it hopes to return between 15 percent and 18 percent IRR. A first closing is anticipated after the first quarter of the year.

According to a document of US pension fund Los Angeles County Employees Retirement Association (LACERA), Invesco has also brought to market an open-ended fund focused on core investments also in Japan and Australia primarily, but also in Hong Kong, Singapore, China and South Korea.

In the document, LACERA recommends making an equity commitment of up to $100 million to the fund, expected to be part of a forthcoming $400 million initial closing. Invesco anticipates the fund will grow to $1 billion over five years and further after that time.

In launching a core, open-ended fund, Invesco joins a small handful of real estate investment managers in Asia to operate such vehicles, more commonly found in the mature markets of Europe and the US. The introduction of the Invesco Real Estate Asia Fund, which LACERA described as Invesco’s flagship fund in Asia, does much to underline the increasingly sophisticated nature of many of Asia’s property markets. Other firms to operate similarly-structured vehicles include Pramerica Real Estate Investors, PRUPIM and MGPA.

The recommendation by LACERA to commit as much as $100 million to the fund further underlines the appeal of risk-averse vehicles in a region still expected to generate sustainable growth despite wider global economic uncertainties.

LACERA said the low risk strategy was consistent with LACERA’s objectives, policies and procedures, which direct a majority of the fund’s real estate allocation – more than 60 percent – to core investments. Indeed, the investment by LACERA is its first into core real estate outside of the US.

The fund is expected to generate returns of between 8 percent and 10 percent over its first ten years.

The concurrent launches come almost two years after Invesco acquired the Asian real estate business of AIG, massively boosting its assets under management in the region from about $500 million to close to $6 billion in the process.

The platform’s initial focus was managing through AIG’s Asia Real Estate Partners II opportunity fund, which closed on $740 million in 2008 and was largely unspent at the point of the takeover, a pair of Japanese value-added funds and some Japanese separate accounts, which were fully invested.

Invesco declined to comment.