SEB Asset Management, the real estate investment subsidiary of the SEK2.4 trillion (€276 billion; $369 billion) Scandinavian bank SEB Group, has slashed its capital raising target for its second pan-Asia core-plus/value-added fund.
The firm originally set out to raise €600 million for SEB Asian Property II, which it brought to market early last year. However, it has said the scale of its market opportunities and investor appetite had prompted it to reduce that target to €200 million.
Choy-Soon Chua, the firm’s Asia managing director revealed the reduced target even as the fund successfully corralled its first equity, hauling aboard €80 million. And that total is expected to increase to €100 million within weeks. A final closing is anticipated by the end of next year.
“There are many opportunities in the development space, but we wanted to be more wary, and the [core, core-plus and value-added] strategy more suits the risk appetite of our investors,” Chua explained. Underlining this current trend, research by real estate association INREV, published in March, revealed that 90 percent of European and Asian investors are invested or intending to invest in non-listed real estate in Europe, compared to only 58 percent in Asia Pacific.
Nonetheless, despite seeing a dearth of institutional grade real estate in Asia generally, SEB’s investors still saw the region as an attractive growth story, and remained keen to invest, albeit at a smaller scale. Further, the firm has an appetite to add to its European-centric investor base with more capital from Asia itself.
SEB Asian Property II is about 15 percent invested at this point as an outlay has been made for a stake in a development in Hong Kong.
SEB is also in the process of raising an open-ended core fund for Asia, SEB Asia REI. That fund does not have a capital raising target, but investments into the fund are expected to come in tranches of €25 million to €50 million, according to Chua. He would not reveal how much equity had been corralled to date but did state the fund had already been used to be a hotel asset in Osaka in a deal valued at up to €90 million.
SEB’s two funds are primarily targeting China, Japan, South Korea and Singapore, with the potential to also transact in Australia, Malaysia and Indonesia, Chua said.