Thailand’s Government Pension Fund (GPF) had been seeking an investment manager to help grow its real estate portfolio beyond its own borders for quite some time before it selected Cleveland-based Townsend Group last month.
According to multi-managers familiar with the mandate, the state pension, which manages the retirement accounts of Thai government officials, canvassed views on its international property strategy one year before officially posting its request for proposals last November.
“They are on a substantial learning curve,” said one multi-manager. “I think they used this process to extract as much information as they possibly could,” added another.
With the ‘process’ now over, GPF selected Townsend from a final shortlist that also including the multi-manager platforms of CBRE Global Investors and London-based Aviva Investors. As PERE went to press, documents crystallising the appointment were being finalised.
Sources told PERE that Townsend’s victory came in part because the consultant-cum-investment manager was considered best placed to provide GPF with a bespoke investment vehicle to execute its long-researched plans. Other bids were understood to have included set strategies for the state pension to adopt – less customised and more ‘off-the-rack’.
GPF is looking for a return of more than 10 percent from the $250 million it is deploying through Townsend. Over the next 12 to 18 months, the firm is expected to commit approximately 80 percent of the capital into core funds, split one-third each between North America, Europe and Asia. The remaining 20 percent is to be placed with special situations fund mangers. In terms of particular types of special situations thought to be favoured by GPF, expect to see fewer blind-pool funds and more co-investments, secondaries and asset or fund recapitalisations.
GPF becomes the latest in a line of Asian state investors to allocate capital for overseas property. While bigger investors like the Government of Singapore Investment Corporation, China Investment Corporation and National Pension Service of Korea actively have deployed billions of dollars into overseas property, a number of smaller state investors have started to follow suit, including groups from Korea and Malaysia. With approximately THB556.5 billion (€14.35 billion; $17.65 billion) in total assets under management, Thailand’s GPF fits into the comparatively smaller camp.
In common with other smaller investors, GPF does not house the requisite personnel to manage an international portfolio. Still, it is keen not to miss out on what it regards as a window of opportunity to collect investments in the world’s core property markets where, in many instances, values are still recovering and therefore has trusted in external management to see its quota filled.
Indeed, Thailand GPF has emerged as a global real estate investor that knows what it wants. Townsend’s task now is to give it to them.