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Merrill Lynch to sell $2.65 billion Asian opportunity fund platform

Merrill Lynch has instigated a process to sell the management of its pan-Asia real estate opportunity fund. The New York-based investment bank is thought to have begun sounding out potentially interested parties.

Merrill Lynch has decided to sell the management of its $2.65 billion Asian real estate opportunity fund platform.

PERE understands that the New York based investment bank is in the early stages of sounding out private equity firms with an interest in real estate. It is thought the sales process was initiated two weeks ago.

Reports in Asia in February suggested that Blackstone and Apollo Management are among those interested in the platform but that was before a sales process was initiated.

The Asian Real Estate Opportunity Fund is currently part of Merrill Lynch’s global real estate principal investments division led by Doug Sesler who started the role in February 2009.

The fund, which closed late last year, is fully invested and has made acquisitions in Korea, Japan, China and India. It is managed by a team of approximately 60 staff.

Sources said fee income from managing the portfolio totalled approximately $40 million a year, equal to 1.5 percent of total equity.

One option is for Merrill Lynch to remain as a limited partner. The Wall Street bank invested approximately $662.5 million, equal to 25 percent of the total equity raised.

The decision to sell the platform comes just months after managing director and head of global commercial real estate, Tim Grady, who had direct responsibility for the fund, resigned from his position. He was replaced by managing director and head of acquisitions for real estate, Martin Seol.

Merrill Lynch has also shelved plans for a second real estate opportunity fund for Asia as the fundraising market has become more challenging.

Merrill Lynch declined to comment.