The void left in Asia’s private equity real estate market by the withdrawal of various US financial institutions is slowly being filled by other kinds of investment powerhouses. BlackRock, the world’s biggest asset manager, is one example, thanks to its imminent consumption of MGPA. Kohlberg Kravis Roberts (KKR) & Co, the private equity giant, is another.
Next month, Bryan Southergill joins KKR as its first head of real estate for Asia, ironically from investment bank JPMorgan. After he joins, KKR will have regional leadership in Asia, Europe and North America. Guillaume Cassou was hired as the firm’s Europe head last year, while KKR’s global real estate head Ralph Rosenberg joined in 2011 and is based in New York.
Still on gardening leave, Southergill was unavailable for comment, and KKR declined to divulge details of his mandate when asked. For now, onlookers must examine what the firm has done in real estate in the region so far.
Charged with building a real estate platform from scratch, Rosenberg has led a slow and measured process. According to a report by Bloomberg, just $650 million of equity has been committed in 10 property transactions, and half of that has come from KKR’s balance sheet.
While KKR is close to raising equity for its first private real estate fund (it was introduced in an April earnings call), it will take time before Southergill, in his new role, is slugging it out with Asia’s larger players for the region’s big deals. Headlines from Asia to date have focused on a joint venture fund raised in tandem with Sino-Ocean Land, the Beijing-based developer – the partners raised an initial $140 million in late 2011 and are believed to have added further equity since – and another joint venture with Government of Singapore Investment Corporation, the sovereign wealth fund, aimed at lending $150 million to developers in India.
Southergill’s last role at JPMorgan was head of Asia real estate investing in the bank’s Global Special Opportunities Group. He spent about five-and-a-half years at the bank’s Asia headquarters in Hong Kong, leading its proprietary real estate special situations investing business across the region. Like KKR, he invested greatly from the balance sheet and was engaged in transactions via senior, mezzanine and subordinated debt, bonds, warrants, preferred equity and straight equity channels. His tenure saw both property companies and hard assets acquired.
Before joining JPMorgan, Southergill worked for rival investment bank Morgan Stanley for more than nine years. Working from its New York, London and Hong Kong offices, the then-vice president laid the foundations of his real estate career, participating in milestone transactions such as Morgan Stanley Real Estate Investing’s first investments in China, Hong Kong, Singapore and Thailand. Similar in style to the executives of KKR engaged in private equity deals, Southergill found himself assuming seats on the boards of various corporate-level investments such as Songbird Estates, the property company behind London’s Canary Wharf.
This array of experiences no doubt proved alluring to KKR, which also prides itself on being able to enter a real estate investment via a multitude of channels.