Pacific Star aims for combined $1bn fund

Singapore-based Pacific Star, the largest private equity real estate firm in the country, has decided to mesh two fundraising efforts for vehicles with differing strategies into just one.

Pacific Star has decided to switch from raising two separate funds to just one combined effort in the face of investor reaction.

Last year, the Singapore-based firm launched Asia Fund Select, an open-ended investment fund that aimed for at least $1 billion in capital commitments and Enterprise Property Investment Corporation, a closed-ended vehicle targeting $500 million to invest in Asian real estate companies.

However, PERE has learned the firm has decided to combine the fundraising effort instead, hoping to coral $1 billion for a vehicle which will adopt key aspects of both, Pacific Star Asia Fund IV – Asia Fund Select.

The merged offering, which is expected to offer a blended IRR of about 15 percent, will enable investors to invest across Asia in core, value-added and opportunistic deals.

At the same time, prospective LPs will have the option to invest in any of three sub-funds with more concise regional focuses. The sub-funds include: North Asia, comprising Japan and Korea; Greater China, comprising China, Hong Kong, Macau and Taiwan; and southeast Asia, comprising Singapore, Malaysia, Thailand, Indonesia and Vietnam.

Benett Theseira, president of direct investments and private equity, said: “Knowing their preference for closed-ended funds, we decided to combine both funds as an integrated closed-ended product, while preserving the modular components that were favoured,” he said.

He said the decision to merge the funds was made in August. Fundraising is expected to begin this quarter, with a final close penned by the end of 2011.

He added: “From a risk-return perspective, Asia real estate offers a wide mix of strategic options. This ranges from stable income producing assets to re-positioning and value-added opportunities for well located but under-performing properties. In includes development and private equity type opportunities to recapitalise platforms and take private real estate companies with good growth potential public. Asia Fund Select allows investors to flexibly access the full range of these options.”

Pacific Star, launched in 2001 by group president Jeff Tay, has transacted more than $5 billion of real estate deals across Asia since its inception, generating returns of more than 40 percent for commercial real estate transactions and more than 100 percent for pre-IPO investments in real estate businesses, the firm said.

Minimum investor commitments for the incoming vehicle are to be $10 million for the regional fund and $25 million to each of the sub-funds.