Merrill Lynch $5bn Asia platform down to two

Merrill Lynch has reached the “last stages” of the process to sell the management of its $2.65 billion Asian Real Estate Opportunity Fund and the other real estate investments made the bank’s global real estate principle investments group in Asia. The total value of the assets combine to approximately $5 billion.

PERE has learned that LaSalle Investment Management and ING Real Estate Investment Management are the remaining bidders for the mandate from a shortlist that at one time included The Blackstone Group, Apollo Management, and AREA Property Partners. A winner is expected to be chosen after the fund’s LPs are consulted later this month and a deal could be concluded by early next year.

“There has been a whittling down and they are now in the final stage in the shortlisting process with a couple of candidates,” one source close to the process said.

The mandate was officially made for sale in May after Bank of America (BoA), which acquired Merrill Lynch last year, chose to exclude the real estate opportunity investing platform from its future strategy.

However, it is also understood that BoA is evaluating the possibility of retaining the management of the platform, should a sale fail to materialise. “When they entered into this process, the firm had just been acquired, a number of senior people had departed and the markets were at their blackest. Then the platform had a lot of instability.”

“A lot of things have stabilised since then,” he said, “They haven’t had any senior departures and the fund has completed sales.” It is understood that more than $100 million of assets in China and Hong Kong have been sold by the fund, which held a final equity closing in late Autumn last year.

The fund has also been successful in refinancing 75 percent of its Japanese investments, which make up half of the outlays made by the vehicle. As well as China and Japan, the fund also invested in countries including India and Korea.

The platform is managed by a group of 60 real estate professionals based in major cities such as Tokyo, Hong Kong and Beijing. It is led by Martin Seol, who took over from Tim Grady after the latter resigned in March.