AXA Real Estate Investment Managers (AXA REIM) is adding its name to a growing list of private equity fund managers which believe the immediate future of the sector is in country and sector specific funds over pan-continental efforts.
This summer, the real estate investing arm of the French insurance giant said it would target Chinese residential investments for its first Asia focused real estate fund. In doing so, it plans to avoid the continent-wide strategies employed by the likes of Citi Property Investors, Merrill Lynch, LaSalle Investment Management, MGPA and others.
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Frank Khoo |
The firm, led in Asia by former Pacific Star dealmaker Frank Khoo, is to launch the fund aimed at buying residential assets across China’s first and second tier cities, in partnership with Chinese insurer Ping An. Taking the niche concept further, AXA REIM is planning to buy homes catering for “middle to middleupper class” occupiers.
The vehicle is targeting between $400 million and $500 million in equity. While question marks over performance and future viability hover over pan Asian efforts elsewhere, Khoo believes AXA’s timing in entering Asia, should serve the firm well. Khoo told PERE: “Unlike a lot of our competitors we are not going to run Pan-Asian funds. We are going to do country specific funds in specific asset classes, “he said, “Asia is extremely diverse and each asset class, be it commercial, retail, residential, logistic or hospitability, requires a different and specific skill set. It is difficult to be good in all countries and across all asset classes so our approach is really to come up with the best type of fund in a particular country for a specific asset class.”
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Frank Khoo |
Such definition, Khoo argues, will enable the funds AXA manages to have a “more defined and clear strategy” which will lead to “stronger execution ability.” Khoo said this should help mitigate risk effectively. “We don’t have as big a platform as a lot of our competition in Asia, but then we also don’t have the legacy issues,” he said, “and our mothership back in Europe is sound.” He said both elements are connected: “Even if you have no legacy issues in Asia, if your mothership is on fire you might have to direct resources to put the fire out.”
AXA REIM grew from €23 billion in assets under management to approximately €40 billion over the last eight years. Khoo said the impetus to channel efforts to Asia stems from the actions of AXA’s primary insurance business: “The insurance company has been pretty aggressive in Asia and we are following behind them.”
The China fund is expected to launch in the first half of next year and AXA REIM hopes to hold a first close in the second half. It is aiming to provide a return of between 18 and 22 percent.
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