ASIA NEWS: Controlling the controllables

What does a regional real estate investment management business do when its parent business decides to divest it within four years? Control the controllables, according to Richard Price, chief executive for Asia at ING Real Estate Investment Management.

Four months after ING Group announced it would exit the business by the end of 2013 alongside a wider strategy to divest its insurance and investment management divisions, Price said ING REIM remained “a large business” with “lots of potential”.

“Clearly uncertainty is unfortunate, particularly in an institutional business likes ours. But to suggest we can’t do any business because of the ongoing project to change ownership would be foolish,” he stressed. “We have a very strong list of clients that remain engaged and indeed, some are doing more business with us.”

ING REIM, which had approximately €4.5 billion of assets under management across six offices in Asia as of November last year, is actually likely to grow over the next year.

Last June, LPs in Tokyo-based New City Fund Management’s $772 million pan-Asia opportunity fund unanimously voted to replace the embattled fund’s GP with ING. Some of those same LPs have selected ING REIM’s platform to repeat the feat on another troubled Asia fund, although Price declined to comment further.

Price said: “Had New City Corp (parent company of New City Fund Management) gone into bankruptcy and had the fund become embroiled, the likelihood was investors could have faced a total loss of their equity. Today the prognosis is for substantial equity recovery and this puts the investors in a better place.”

ING REIM has also just started marketing its second Chinese opportunity fund. Having originally sought to launch the ING China Opportunity Fund II last September, Price said the firm postponed introducing the vehicle until investor sentiment had improved.

Now he believes the residential-focused fund will have better traction and aims to raise between $500 million and $750 million. A first closing is expected within the next three to four months. The seven-year fund will target principally secondary cities across the country and is expected to deliver a return of approximately 20 percent.

It appears the staff at ING REIM have bought into Price’s optimism too. Rather than lose bodies following the announcement by ING Group, ING REIM in Asia has actually hired two people. Buoyed by positive return generation, Price has not needed to deal with attrition issues. In Korea, for example, he said the firm sold close to $1 billion in assets last year: “We raised 12 percent target return capital and the investors banked a better than 22 percent return. That’s a good day in my book,” he added.

“I think the timing and the manner of the announcement [made on 26 October, 2009] was unfortunate but it is what it is. I believe the senior team here are fully committed to the effort. We recognise we can’t control what happens above, but we certainly can control what we do everyday for our clients.”