August 30, 2018 / 9:09 AM / 3 months ago

UPDATE 1-Baring Private Equity Asia closes $1 bln real estate fund

(Adds quotes from fund executive)

By Kane Wu

HONG KONG, Aug 30 (Reuters) - Regional investment firm Baring Private Equity Asia’s real estate arm on Thursday announced the final closing of a $1 billion Asian real estate fund, its second and biggest to date.

The new fund was oversubscribed from an initial target of $750 million and reached its final close in July, the Hong Kong-based firm said.

Baring’s second pan-Asia Pacific real estate fund will focus on total or partial equity investment as well as lending opportunities to real estate projects across the region.

The new fund has already made its first investment in Forest Logistics, a logistics operating platform in China for about $300 million, said Mark Fogle, Baring’s head of real estate.

The fund adds to a massive industry-wide pool of money for Asian acquisitions and investments, with investors attracted by rapid economic growth compared to other major markets. Growing urbanization and rising incomes, particularly in China and India, have boosted investor appetite for shopping malls, warehouses and other property assets.

In June, global fund Blackstone Group raised $7.1 billion for what it called its second regional “opportunistic” real estate fund.

Baring started real estate investments in 2011 and raised its first Asian fund focusing on the sector in 2015 at $365 million, which has made nine investments and generated a 21 percent net internal rate of return by June 30.

The firm’s real estate funds typically invest a third of the capital each in debt, value-add projects for existing property or development projects, Fogle said.

“We are really trying to focus on things that are off market, strategic and so far we’ve been able to find those deals,” he said.

The firm’s country focus is now on Japan, Greater China, and the Philippines, Malaysia and Thailand in Southeast Asia, as well as South Korea, he said.

Fogle also sees opportunities in the warehousing and logistics space and divestments from Chinese conglomerates such as HNA Group and Anbang Insurance Group.

The bulk of the capital raised in the second fund came from pension funds, endowments, foundations and insurance companies, Baring said.

Most of the investment in the fund came from North America, with commitments from the Middle East and Europe as well, Fogle added, citing Manulife and Abu Dhabi Retirement Pensions & Benefits Fund as among the investors.

Formed in 1997, Baring has become one of Asia’s largest private equity investment houses with a total committed capital of over $16 billion. The firm is separately raising $6 billion in a new Asian fund which is expected to close this year, Reuters previously reported. Baring declined to comment on the fundraising.

The firm was part of a consortium led by Chinese investment house Hillhouse Capital Group that offered to buy out fast food chain operator Yum China Holdings Inc. for $17.6 billion. Yum China’s board rejected the offer.

Earlier this year, the firm teamed up with Pai Partners to acquire World Freight Company International, and was also part of a consortium that took private New York-listed Chinese car rental firm eHi Car Services Ltd. (Reporting by Kane Wu; Editing by Sunil Nair)

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