Phoenix secures fundraising extension for Fund VI despite beating target – Exclusive

The Hong Kong-based firm has already raised around $1bn, surpassing the target and the hard-cap for its sixth opportunistic real estate fund.

Phoenix Property Investors has delayed the final closing for its sixth flagship Asia opportunistic real estate fund until the end of September.

Phoenix Asia Real Estate Investments VI was launched towards the end of 2017 with a $900 million target and $1 billion hard-cap. It held a $221 million first close in January 2018 and, per the fund’s original documentation, confirmed by two sources familiar the process, the fundraise was supposed to wrap up by June 2019.

But although the firm had achieved its $900 million target, a formal fundraising extension request of up to 10 weeks was put to investors. All are believed to have agreed, according to both sources.

They cited administrative reasons for the closing delay. The firm wanted to accommodate a “small number of important LPs,” one explained, that asked for more time to complete their due-diligence processes and sign off their commitments.

However, in light of these commitments, the firm also extended the fund’s $1 billion hard-cap target by around 20 percent. The extension is expected to put Phoenix into the Asia’s $1 billion club – now comprising around 20 managers that have successfully raised $1 billion or more for a closed-end real estate vehicle.

The fund is also the largest in its own series. Fund V was closed at its $750 million hard-cap in December 2013, while the 2010-vintage Fund IV closed at $460 million.

One Hong Kong-based capital advisor explained there is a downside in asking investors for a fundraising extension. Raising more capital than the amount originally stated in marketing documents can lead to diluted equity stakes for initial investors. There can also be concerns about the extra time spent by the manager fundraising, as opposed to deploying capital.

In Phoenix’s case, one of the sources directly involved in the process insisted the delay and increase in hard-cap would not impact the fund’s strategic and tactical allocation plans. He added the firm was not reaching out to new investors. On deployment, he said the fund’s capital had already been invested across more than 10 deals so far.

The fund can be invested across Asia, markets including China, Hong Kong, Japan and Australia, the last of which is new to the firm’s opportunistic series. Phoenix is understood to be charging a 2 percent management fee for Fund VI, the same fee it charged for the prior fund.

Phoenix declined to make an official comment on the fundraising.