BPE Asia Real Estate, the real estate platform of Baring Private Equity Asia (BPE Asia), last month wrapped up fundraising for its maiden real estate fund, hauling approximately $365 million in equity commitments.
Capital for the opportunistic vehicle was raised from a diverse mix of institutional investors, which included US pension funds, European private wealth managers, a Hong Kong family office and a Middle Eastern sovereign wealth fund. The firm is believed to be targeting an IRR of more than 20 percent from the investments made via the fund.
The successful capital raising haul comes three years after BPE Asia one of Asia's largest private equity firms hired Mark Fogle, a former senior executive at AIG Real Estate and RREEF, to lead and grow a team for its private real estate investment management business in the region. The team now boasts other experienced names, including Charles Lam, who was previously head of China for Pramerica Real Estate Investors.
The firm concluded its capital raising efforts around three months before the fundraising period was scheduled to end in order to get about deploying the capital.
Commenting on the fundraising, Fogle said that first-time funds generally find it challenging to raise institutional capital, especially in the aftermath of the financial crisis. But in his own firm's case, investors were attracted to his team's acumen with real estate finance and its development expertise, developed over lengthy careers with other investment management businesses, which he said gave it an edge over its competitors.
“Our entire team comes from the credit side of the business. Of the 100-plus deals that we've completed in the past two decades, 60-odd were debt. That makes a difference as we approach deals from a lender's perspective of focusing on the downside,” he said.
He added further: “We have huge development expertise because we've built a lot of buildings across Asia. Whether we build or buy, we understand the quality of a property, and what you get when you pay for something including what's behind the walls or in the foundations.”
Around $50 million of the equity raised via the fund has already been invested in two deals – an office building in the Philippines acquired for $25 million and $30 million invested in mezzanine debt for a portfolio of office, retail and hotel assets in Korea. The remainder is expected to be deployed in around eight to ten investments during the fund's three-year investment period. The firm is said to be scouring for these in emerging Asian markets, including China, India and Southeast Asia.