The New York-based financial services firm JPMorgan Asset Management is offloading its Indian fund management business to Apollo Global Management.
Apollo’s takeover of the platform for a “nominal consideration” will officially close this summer, a source familiar with the transaction confirmed to PERE.
JPMorgan declined to comment on the deal or provide further information. In an email response, the firm’s spokesperson said: “J.P. Morgan Asset Management remains strategically committed to Asia Pacific real estate and we are dedicated to continuing to invest and serve clients in the region.”
Following the acquisition, the New York private equity giant will effectively be taking control of two private equity real estate funds managed by JPMorgan Asset Management, 15 discreet investments and a staff of 10 people in India. According to PERE data, the two funds are the opportunistic vehicle JP Morgan India Property Fund that closed on $360 million in 2006 and its successor vehicle, the $155 million JPMorgan India Property Fund II.
The Firefighters’ Retirement System of Louisiana is an investor in the JP Morgan India Property Fund with an $8.9 million commitment. According to an investment performance report published by the US pension fund in May 2018, the fund was generating -12.2 percent returns since inception.
Meanwhile, some of the LPs in Fund II include the Michigan Department of Treasury, the Michigan State Employees’ Retirement System and the Omaha School Employees’ Retirement System (OSERS). According to a JP Morgan investor presentation made in September, 2017, 85 percent of Fund II’s capital was committed at the time in ten residential deals, and 10 percent of the invested capital had been realized. The firm estimated the projected gross IRR returns from the fund investments to be 20 percent with a 1.7x equity multiple (in INR terms).
According to PERE’s source, Apollo’s Asia management team’s turnaround of the Trophy Property Development Fund in China helped in getting the investors in the two JPMorgan funds to agree on the change in management. The firm’s rescue job on the Chinese development fund, led by real estate veteran Philip Mintz, officially ended in October. As PERE reported at the time, the fund’s investors saw returned three-quarters of their capital.
JPMorgan’s platform purchase marks an expansion of Apollo’s India real estate exposure. The firm has made investments in India in hotels and other commercial sectors. In 2016, for instance, the firm reportedly invested INR 4 billion ($58 million; €49 million) in the real estate developer Logix Group via a structured debt transaction to fund the construction of residential developments and an office project, according to an article in the Indian news outlet Livemint. PERE understands that Apollo has deployed around $200 million across different investments in India in the last one year.
Nipun Sahni will be leading Apollo Global Management’s expanded India platform. Sahni joined Apollo Global Management as partner and head of real estate, India in 2015. He previously headed Bank of America – Merrill Lynch’s real estate investment operations in India, working alongside Apollo’s Asia real estate chief investment officer Timothy Grady, who led that platform at the time.