FUNDRAISING: Breaking out of China

Gaw Capital, the Hong Kong-based private equity real estate firm, is plotting the launch of its latest pan-Asia opportunity fund, with a $1.5 billion capital raising target.

Gaw Capital Real Estate Fund V will be the firm’s most ambitious fundraising effort to date following the $1 billion equity haul for Fund IV that was closed in 2013.

One of the most striking details about the fund, however, is its investment strategy, which only goes to further solidify the firm’s continuing mission to break out of the China market and become a global real estate investment management business.

According to details obtained by PERE, the firm, which began soft marketing the vehicle in late October, is planning to direct 50 percent of the capital raised into markets outside of China. This means if the firm becomes successful in meeting its fundraising target, as much as $750 million would be deployed in other Asian markets. Japan, Vietnam and Korea – markets in which Gaw Capital has previously invested – are expected to be part of the fund’s target destinations.

This is the first time Gaw Capital will be expanding the geographical spread of its fund investments to such a degree. The flagship opportunity fund series has historically focused mainly on investing within China. Fund IV, which ultimately raised $1.6 billion including co-investment capital, was 20 percent invested in non-China markets.

Outside of its fund series, the firm has been making active strides in investing in cross-border transactions over the past few years. For example, in June it made its first investment in Vietnam with the $106 million acquisition of a property fund called Indochina Land Holdings 2 after spending five years researching the emerging market.