Mapletree hits $1.4bn for China opportunistic fund

Mapletree Investments, the Singapore-based property company, has raised what is thought to be the largest ever blind pool of capital for a closed-ended opportunistic fund targeting China.  

The integrated development, investment and capital management company that employs 1,600 people across Asia, has raised a total of $1.4 billion of commitments for Mapletree China Opportunity Fund II (MCOF II).

In a fast fundraise aided by placement agent Hodes Weill, the company has reached its hard cap within ten months of launching and has exceeded its $1 billion target. Indeed, the firm has had to turn away significant additional equity commitments from interested investors, the company has stated.

Mapletree is expected to announce the completion of its fundraise tomorrow having achieved a first close at the end of June on $1.1 billion. Investors come from North America, Europe, the Middle East and Asia and include Mapletree’s parent company, the Singapore state-owned investment fund, Temasek Holdings.

The fundraise is certainly one of the largest China-focussed private real estate vehicles ever raised, surpassed only by a joint venture investment company between Goodman Group and the Canadian Pension Plan Investment Board which recently saw the total equity allocation rise to $1.5 billion.  

However, it is thought to be the largest closed-ended China opportunistic fund ever raised amid signs of increased interest in China and Asia generally. Recently, Gaw Capital Partners held a close of $933 million for its latest effort, Gateway IV while Alpha Investment Partners, the real estate investment arm of Singapore-based developer Keppel Land, held a final closing for its Alpha Asia Macro Trends Fund II on $1.65 billion, although that has a pan-regional focus.

Mapletree presented potential investors with two mixed-use development projects to seed the fund. The first is the 3 million square foot mixed-use Minhang scheme comprising Mapletree Business City and VivoCity in Shanghai. The second is South Station Enterprise City, a giant 5 million square feet-plus mixed-use project in Sanshan New City, Foshan.    

MCOF II is the second China-focused fund raised by Mapletree. Mapletree had been investing in China since 2005 but raised its first fund in 2008 when it assembled $1.2 billion of commitments for the Mapletree India China Fund and became fully committed half way through 2012 ahead of the April 2013 end of its investment period.

Mapletree’s regional chief executive officer for China and India, Quek Kwang Meng, said he believed   investors had showed “confidence” in the company’s “development strength” in mixed-use projects, and in its substantial China platform. Greater China is Mapletree’s largest overseas market with total assets under management of S$6.86 billion as at 31 March 2013. 

With increased decentralisation as well as the growing affluence and consumer spending by a large middle class, Mapletree has been telling investors there is increased demand for well-located, designed and managed real estate. 

Kwang Meng said: “At the same time, the real estate market is experiencing tighter credit conditions and the domestic development sector is undergoing a period of consolidation, thereby increasing the need for well-capitalised, experienced real estate investors.” 

The first fund has so far made two exits that are said to have led to cumulative distributions to investors amounting to nearly 90 percent of total paid-in capital to the vehicle. 

Hiew Yoon Khong, group chief executive officer, explained the fundraising feat for MCOF II had been “facilitated” by the successful investments and realisations made in the China market.

Mapletree also accredited its own capital commitment to its second China fund as an important factor in convincing outside investors to join its strategy: “We believe in aligning our own capital commitment significantly with our co-investors. For MCOF II, we have committed 36 percent of the fund’s total capital commitments” Yoon Khong said.