Jumpstart Capital Partners, the Los Angeles-based private equity real estate firm, is to increase the capital raising target of its forthcoming opportunity fund after expanding its investment remit.
The firm, led by chief executive officer Jason Neal, is planning to raise $250 million for ANZUS I, an investment fund aimed at taking advantage of “distressed” and “under-valued” real estate opportunities in Australia and the US in addition to its original target of New Zealand. PERE reported in July last year that the firm aimed to raise $100 million for a New Zealand-only vehicle. The revised vehicle is expected to become “active” later this year.
Neal said the majority of the vehicle’s capital, to be raised from sources including institutional investors and fund of fund managers, would be invested in Australia and New Zealand, while up to 20 percent could be allocated to US investments.
Of New Zealand, he said: “It weathered the global economic downturn extremely well, but was impacted by restraints in the credit markets, which ultimately caused a collapse in the secondary financial sector – things such as mezzanine debt. The impact effectively stalled real estate investment and large-scale development that is necessary for a country where demand is outperforming supply. This has created unique opportunities for private equity investment.”
And of Australia he said: “This is a market to be tapped into moving forward.” Neal compared the Australian real estate market to “the US of the past” adding the “risk-reward ratio is more favourable”.
Furthermore, he said: “the key is having a strong network for quality deal flow, specifically ‘off market’ transactions, which is our core focus.” To address that point, Neal said Jumpstart is in the final stages of selecting an Australia-based investment partner which will help source deals.
Mirroring typical sentiment in Asia Pacific currently, Neal said the firm planned to establish a deal pipeline for the fund to ensure that investors are as aware as possible of what assets will be purchased, prior to fundraising. Only this week, Harvest Capital Partners, the China-focused fund manager, closed on $325 million in equity for a development fund having adopting a similar principle.
Neal said: “The days of raising capital and then finding deals are in the past. For good reason. The same can be said for investors relying primarily on a high-profile management team.”
Also similarly to Harvest Capital, Jumpstart intends to give its limited partners the ability to be represented on the fund’s investment committee as a means of offering them more control over investments.
The fund will target an IRR of more than 25 percent although Neal said it had already secured an “opportunity that offers conservatively 75 percent IRR and a 5x equity multiple”.