When PERE broke the news of Merrill Lynch's decision to sell the management company of its $2.65 billion pan-Asia real estate opportunity fund platform, the investment bank was midway through informing the fund's investor pool of more than 50 limited partners.
According to a source close to the matter, the process is still ongoing despite the coverage, as the investment bank – in the aftermath of its takeover by Bank of America – continues to streamline its business.
No formal offers have been made for the management of the Merrill Lynch Asian Real Estate Opportunity Fund, which closed above its $2 billion target in November last year. However, those involved in the process are thought to want to conclude a transaction by the end of the year.
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Merrill Lynch sells management of Asia fund |
The source said: “A process like this will take a certain time to reach closure because the investors have to be in a position to vote [for a new manager]. With any organisational change, you want it to be done as expeditiously as possible. [A sale by] the end of the year would be an objective for both the investors and the platform.”
The sale of the platform is being led out of New York by global head of real estate principal investments Doug Sesler and his team, contrary to early suggestions that it was being led by the fund's LPs. Sesler started in his role in February.
The fund is fully invested and has made acquisitions in Korea, Japan, China and India. According to another source, fee income from the portfolio totalled approximately $40 million a year, the equivalent of 1.5 percent of the fund's total equity.
Merrill Lynch itself committed $800m of the fund's equity, but the Wall Street bank's stake is not part of the sales prccess. Other investors in the fund include the Public School Teachers Pension and Retirement Fund of Chicago, according to PERE's sister database, PERE Connect.
One source said that whichever firm eventually takes over the platform, it is likely to employ most or all of Merrill Lynch's 60-strong real estate team, led regionally by Martin Seol. Seol took charge following the resignation of managing director and head of global commercial real estate Tim Grady in March.
“These are complicated assets,” the source said. “You are talking about managing investments in Asia across a diversity of markets and joint venture partnerships as well as existing lending situations. It would be problematic to simply try an ease a portfolio in.”
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