PAG’s IPO is an anomaly in Asia private real estate

The Hong Kong-based firm’s filing shows confidence in the public markets, but few other managers are likely to follow suit.

PAG’s decision to push ahead with its rumored listing goes against the grain of how other managers are pursuing growth in Asia’s private real estate market.

The firm filed for an initial public offering on the Hong Kong Stock Exchange late last week with investment banks Goldman Sachs Group and Morgan Stanley as joint sponsors. The heavily redacted document did not provide financial details or a timeframe for the listing, though PAG is expected to seek as much as $2 billion from the listing, Bloomberg reported.

PAG manages some $50 billion across multiple strategies and has built a strong presence in real estate over the past decade: it is now ranked 15th on the PERE 100 and is the third-largest Asia-based firm on the ranking, behind only GLP and Gaw Capital Partners. The firm manages opportunistic, value-add and core-plus real estate strategies, and is seeking in the $2.5 billion for its third Asia value-add fund, according to PERE data.

Despite the prominence of the firm, PAG’s listing – successful or not – is unlikely to inspire many imitators in Asia’s burgeoning private real estate market. After all, most firms in the region have opted for an M&A deal over an IPO to facilitate their growth in recent years. 2020 saw Hong Kong’s Pamfleet sell a majority stake to global asset manager Schroders and Singapore’s ARA acquire logistics specialist LOGOS; while industrial park specialist D&J China merged with logistics firm New Ease the following year. This year alone has seen Asia logistics specialist ESR close on its purchase of ARA, Manulife agree to buy ARCH Capital and, most recently, BPEA agree to sell itself to Swedish private equity group EQT.

BPEA had considered both an IPO and organic growth but ultimately opted for the M&A route to achieve scale quickly, real estate boss Mark Fogle told PERE this week. The merger will provide BPEA Real Estate, with $1.5 billion of AUM across Asia, with access to EQT Exeter’s $20 billion global real estate platform. One key area of growth for the combined platform will be to raise a series of Asia-focused vehicles in the coming months, according to Fogle and Ward Fitzgerald, EQT Exeter’s chief executive.

Recent public markets volatility is unlikely to make IPOs any more attractive. Logistics giant GLP is the only other Asia-based firm in the PERE 100 that has filed for an IPO, having initially sought to list its fund management business in the first half of 2022. However, market upheaval has reportedly delayed or derailed those plans.

It is also worth noting the flurry of M&A in recent years means there are few independent Asia managers left in private real estate. Indeed, only two such firms remain in the PERE 100: Gaw and Keppel Capital. The rest have already made their bets in a bid for scale.