Secured Capital, Aviva Investors launch $250m blind pool club

Tokyo-based Secured Capital and London-based asset manager Aviva Investors have teamed up for the launch of a hybrid investment vehicle which borrows from both the traditional blind pool fund model and the currently popular investment club.

PERE can reveal the two partners aim to garner between $250 million and $300 million in capital commitments from between three and four institutional investors for the fund, which has a 12 to 18 months time-span.

The vehicle is focused on making core-plus style investments in Japan’s office sector. With expected gearing of approximately 50 percent, the vehicle could have a spending capacity of between $500 million and $600 million. Its slated returns are between 10 percent and 12 percent.

The launch of such a product would be a first for both Secured Capital and Aviva Investors and comes at a time when third-party capital managers in the real estate space are becoming increasingly innovative with the investment structures they introduce to the market.

Since the start of the global financial crisis there has been something of a widespread reluctance by institutional investors to back traditional blind-pool commingled funds which offer limited controls. That has led to certain fund managers placing more of an emphasis on separate accounts and investment clubs which have typically been wrapped around individual, and significantly, pre-specified investments.

Borrowing from both the traditional model and the investment club, Secured Capital, which was recently de-listed from the Tokyo stock exchange amid a merger with China-orientated alternative investments firm Pacific Alliance Group, and Aviva, which operates both direct and multi-manager businesses in Asia, are plotting a vehicle capable of investing blind but within tight parameters.

Participating investors would furthermore benefit from approval rights on investments, divestments and other major decisions to be taken by the joint managers.

With a core-plus focus, the blind pool club is not expected to overlap in strategy with Secured Capital’s central business of managing opportunity funds. Currently in the market to raise Secured Capital Real Estate Partners V, the firm hopes to attract $1 billion in commitments.

While this is a rare example of a blind pool club to receive media attention in Asia, the notion of such a product was first mooted as early as February this year when one institutional investor told PERE he had backed such a vehicle in the US and was considering something similar in Asia.

Japan- and China-focused Secured Capital currently has $9 billion of assets under management while global asset manager Aviva Investors, currently has $29 billion of assets under management.

Neither firm would comment.

To read more about Secured Capital and Aviva Investor’s blind pool club, be sure to pick up the December/January issue of PERE.