Bank of America is to grow the real estate funds platform of Merrill Lynch, having decided not to exit the business towards the end of last year.
According to undisclosed sources interviewed by Reuters, the firm, which manages approximately $5 billion of real estate across Asia in funds and on its balance sheet, has hired staff in anticipation of raising another vehicle.
Prior to its acquisition by Bank of America at the start of last year, Merrill Lynch closed on $2.65 billion in equity for its Asia Real Estate Opportunity Fund. Just months later though, the BoA decided to offload the management of the fund alongside the bank's other real estate assets.
A bidding process ensued with suitors including Blackstone and Apollo Management in the frame to assume the management responsibilities of the assets. Both these firms had withdrawn from the process by September, leaving LaSalle Investment Management and ING Real Estate Investment Management as the final two shortlisted bidders.
In December, PERE revealed a decision was taken not to offload the management of the platform for at least until this summer.
The bank has not explained its reasoning behind shelving the sale, but according to PERE sources it came as a reaction to the change in leadership at the helm of Bank of America and because investment markets in Asia had generally improved.
The sale was being carried out in New York by Merrill Lynch’s global real estate investments group headed by Doug Sesler. The Asia platform is headed by Martin Seol, who took charge last March following the departure of previous incumbent, Timothy Grady.
Bank of America's attempts to raise a second fund – the bank scrapped plans for a follow-up to its inaugural effort at the start of last year – could face challenges after US President Barack Obama last week called for legislation to restrict bank-sponsored private equity and hedge fund businesses.