When PERE caught up with ING Real Estate Investment Management’s chief executive officer for Richard Price and head of institutional clients Eduard Wehry in February 2010, they told us how they were poised to thaw plans for the firm’s second China opportunity fund.
Just weeks on from parent company ING Group’s announcement that it would divest the $96 billion global business by the end of 2013, both men were in a combative mood. Determined to “control the controllables” and optimistic of better fundraising conditions to come, the ING China Opportunity Fund II, a residential-focused vehicle for which they aimed to raise between $500 million and $750 million, was to be taken out of the freezer and placed back on the market.
The sale process of ING REIM, however, once again put these plans on hold, and the fundraising was frozen until a solution was found. Now, with Richard Ellis poised to close its $940 million acquisition of ING REIM’s Europe, US securities and Asia businesses, the pair is confident that the time is ripe to “accelerate business opportunities and programmes.” It looks like it will be third time lucky for the fund effort.
“Our priority, of course, is to get the CBRE transaction completed,” Wehry said. “Following that, however, it is our intention to start actively engaging with our clients around the world for new investment programmes in China. We have had to delay these efforts given the uncertainty regarding our ownership.”
The firm would not discuss specific fundraising plans, but PERE understands from wider market sources that the returning fund also is intended to have the capability of investing in other sectors besides residential.
Furthermore, the China fund is not the only investment product ING REIM will re-offer. PERE also understands that the firm has concurrent plans to start fresh capital raising for its open-ended, pan-Asia value-added fund. That fund originally was launched in 2007 with a “buy, fix and sell” strategy and initially corralled $200 million. But again, the widespread capital-raising malaise and ING REIM’s corporate predicament put the brakes on anything further. 
Our priority, of course, is to get the CBRE transaction completed. Following that, however, it is our intention to start actively engaging with our clients around the world for new investment programmes in China. 
Eduard Wehry, ING REIM
“I think that product will be more than valid,” one market source said on the matter, adding that open-ended funds like that are very much “undersold” in Asia. That fund is expected to attract commitments from small to medium-sized institutional investors and add to early investments in China, Taiwan and Singapore.
Post-merger, the platform also intends to increase its exposure to separate accounts. “A large part of CBRE Investors’ business, particularly in the US and the UK, was built on separate account mandates,” Price said. “Globally, ING REIM’s approach has been more focused on funds. Having a firm that really understands the benefits of doing separate accounts is going to be of benefit to those clients that prefer to invest in this format.”
With just a 4 percent overlap in the investor pools of CBRE Investors and ING REIM, the platform’s fundraising plans have been boosted by the lion’s share of an additional 200 mostly US-based LPs to ING REIM’s existing 400-strong LP pool. However, Price stressed the need not to overreach too early: “Our business plan by design is to focus on the strengths of our existing business in the near term.”
Price noted that a proportion of his and Wehry’s initial time after the merger with CBRE Investors must be spent integrating the two platforms. Their task will be more straight-forward than their European counterparts as they have no additional offices and just one new fund to manage – namely the $400 million Strategic Partners Asia II fund, a value-added vehicle with investments in China and Japan. Added to ING REIM’s existing Asia portfolio, total assets under management will be about $5.5 billion.
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