ASIA NEWS: The little giant

CLSA Capital Partners has burst onto the Asian real estate scene once again with its third fund, Fudo Capital III, which is understood to have a target of $850 million and a hard cap of $1 billion. Just two months after the fund’s January launch, the Hong Kong-based manager has been able to gain enough traction with investors to hold a $385 million first closing and, since then, has secured a few extra commitments to bring capital in the fund up to more than $400 million.

Although CLSA declined to comment on fundraising, with its recent closing, the firm joins the ranks of a privileged few real estate managers in Asia that investors have lavished with their capital. Several funds that attracted attention last year include Gaw Capital Partners’ $1 billion Gateway Real Estate IV fund, for which the firm hit its hard cap in just a little under a year; Phoenix Property Investors’ Phoenix Asia Real Estate Investments V, which took 18 months to hit its $750 million hard cap; and Secured Capital’s Secured Capital Real Estate Partners V fund, which closed on $1.5 billion.

Not all managers, however, have been touched by investors’ newfound enthusiasm. Indeed, CLSA’s success only highlights the continued bifurcation of the real estate fundraising environment in the region. LaSalle Investment Management, for example, had to reduce the target of its fourth Asia fund to $500 million from $750 million after a year-and-a-half of fundraising and, as of July, had brought in just $192 million for a first close.

Even though it has not raised a fund for some time and its parent company technically is under new management (bought by CITIC Securities in July), CLSA has struck a chord with its investors, which include medium- to large-sized institutions in the US and Europe.  It has done so by following the value-added strategy of its predecessor funds and targeting an overall IRR of approximately 20 percent.

Indeed, CLSA may be on track to follow the pattern of Funds I and II, which both raised more than their capital targets. According to PERE’s Research & Analytics division, Fudo Capital I hauled $430 million in 2005 versus a $350 million target, and Fudo Capital II raised $815 million in 2009 versus its $750 million target, despite the tough fundraising environment following the global financial crisis.