MGPA scales back Japan division in Asia restructure

MGPA, the Asia- and Europe-focused private equity real estate firm, has undergone a significant corporate restructuring in Asia in an effort to meet the ambitions of its investors.

Over the last month, MGPA has reduced and reconfigured its Japanese division, previously a standalone profit centre, to once again be part of its Asia operations. Simultaneously, the firm has diverted resources to its new office in Sydney and plans to grow its capabilities in China. The firm also has downsized its capital-raising team.

James Quille, executive chairman, told PERE that the corporate reconfiguration was aimed at meeting the ambitions of its investors. “We’re trying to match the capital with the funds we have but also the capital that wants to co-invest alongside. Yes, it will mean more work, but we’ll have to be nimble. We have to be flexible and put our resources where we are going to get maximum bang for our buck.”

The downscaling in Japan marks a return to MGPA’s former structure in Asia when, between 2004 and 2010, its operations were part of the firm’s wider Asia business. In 2010, the firm separated the business to be its own profit centre and installed a dedicated leadership team.

Quille said: “In 2010, we made it a separate profit centre because we thought there would be more capital attracted to Japan.” The firm planned to introduce a second core-plus investment fund following its 2006 MGPA Japan Core Plus Fund, which attracted $865 million of equity, but Quille confirmed that plans for the sequel have since been cancelled.

The Japan division was led by chief executive officer Tom Mills, chief financial officer Helen Powell and chief operating officer Shigeaki Shigemasa, all three of whom are leaving alongside six other staff. Going forward, the firm’s activities in the country will be led by Paul Slimming, a senior executive already working in Japan for the firm.

Quille said the restructuring and the departures did not mean MGPA would stop investing in Japan, where it still has a team of 35 staff working from an office in Tokyo’s high-end Roppongi area. “A substantial team doing acquisitions and asset management continues their work for investors,” he said. “We’re still deploying capital there for both Asia Fund III and Asien Spezialfonds  (a fund for German investors), which recently had its first close”

Indeed, as recently as June, MGPA purchased a portfolio of eight offices in Tokyo for ¥12 billion (€119.7 million; $152 million).

Quille said MGPA would focus increased resources on Australia, where it opened its first office in Sydney last month. The firm already has completed its first outlay in the city, acquiring a secondary office for A$105.1 million (€84.24 million; $109.8 million), also last month.

That investment was made on behalf of MGPA Asia Fund III, the region’s largest private equity real estate fund with $3.9 billion in commitments from investors that include the Canada Pension Plan Investment Board and the New York State Teachers’ Retirement System.

In addition to more outlays from the fund in Australia, MGPA will increase its exposure to China, where it currently has a team of nine staff. “We’re utilising both Asia Fund III capital as well as some investors seeking to co-invest,” Quille said, “So we’re beefing up our team there.”

Elsewhere in the business, MGPA has reduced its capital-raising team by two with Hong Kong-based managing director Chris Andrews and Canada-based managing director Pip White also leaving the firm. Its capital-raising efforts will be led by MGPA’s group chief executive officer Simon Treacy, alongside regional chief executive officers John Saunders in Asia and Laurent Luccioni in Europe.

Quille said: “At the end of the day, the people the investors want to talk with are those running the money.”

There have been no changes to MGPA’s corporate set-up in Europe.

The firm, which currently manages approximately $11 billion of assets, has about 240 staff worldwide.