Arch Capital is half-way to reaching its $500 million target for a new pan-Asian property fund – its first product launch since US hedge fund The Rohatyn Group (TRG) took a 50% stake in the firm in March this year.
Arch Capital-TRG Asian Partners LP has held a first close at $220 million, closely following its launch in May. It is targeting an annual internal rate of return of 18-20% and is on track for a planned final close in December, says Leonard Wei, chief operating officer at Arch.
The private equity fund will invest in residential, mixed-use, retail and selective commercial properties with a primary focus on Greater China, where up to 60% of capital can be invested. Singapore and the Philippines will also feature prominently, with respective maximum investment limits set at 20% and 10%. The fund will also seek opportunities in Thailand and consider deals in Malaysia, Indonesia and Vietnam, says Wei.
A large number of investors in the $330 million Arch Capital Asian Partners property fund, which closed in 2007, have committed capital to the new vehicle, notes Wei. They include pensions, institutions, corporations and Asian family offices located in Europe, the US, Asia and the Middle East.
The new fund is being marketed to the investor base of emerging markets specialist New York-based Rohatyn, which had acquired its stake in Arch from Philippine conglomerate Ayala Corp and subsidiary Ayala Land through a share swap agreement.