SC Management, the Hong Kong and Singapore-based private equity real estate firm, is on the cusp of becoming one of the few firms in Asia Pacific to hit their capital raising target in 2012.
The firm, led by Suchad Chiaranussati, is expected this week to hold a ninth and final closing for its third Asia opportunity fund, Real Estate Capital Asia Partners (RECAP) III, on $530 million – its biggest equity haul to date.
RECAP III had an initial fundraising target of $400 million and a hard cap of $500 million. But PERE understands that while the firm is to halt capital inflows at $530 million, the vehicle was oversubscribed by at least another $100 million.
The firm declined to comment.
SC Management joins a limited number of value-added and opportunistic real estate investment managers to bring their capital raising efforts to the $400 million mark this year. Others include Singapore-based ARA Asset Management, which has raised $400 million so far for its ARA Asia Dragon Fund II, and Fortress Investment Group, which has raised in excess of $600 million so far for its Fortress Japan Opportunity Domestic Fund II.
Approximately 70 percent of RECAP III’s investors are US institutions and those include the New Jersey Division of Investment, which last week revealed it had approved an $80 million commitment to the fund as well as a further $40 million more for potential side car investments.
Timothy Walsh, director at the New Jersey fund said in a memo on the investment that SC Management was a “high-quality manager that continues to take advantage of Asian real estate market dislocation.” Indeed, RECAP II, its 2008 vintage fund, is one of the best performing vehicles of its kind, particularly given the tough market conditions faced by many funds of that vintage.
Underlining its support from investors, SC Management was understood to have been endorsed by the fund’s investors to redeploy the capital returned by that vehicle, which originally attracted $190 million. Ultimately, it is understood that the firm expects to have returned to investors approximately 50 percent of its capital by the end of the year and is on course to generate a gross IRR north of 30 percent and 1.7x equity.
The capital of the firm’s first RECAP fund, which attracted $221 million in 2005, has been totally returned to investors and its investments ultimately generated an IRR of 16 percent and just less than 2x equity.
The target return of RECAP III is 20 percent IRR and 2x equity in line with typical opportunistic real estate funds. RECAP III’s capital is expected to be deployed in Greater China, Japan, Indonesia, Japan, Singapore, South Korea, Thailand and Vietnam and, to date, the fund is understood to be almost 15 percent deployed. Early deals include a controlling investment in a J-REIT and an office-led property in Bangkok.
The firm’s capital raising efforts were aided by Blackstone-controlled placement agent Park Hill Real Estate and its legal advisor is Paul Hastings.