The Canadian pension fund plans to increase its allocation to the region from 10% to 15% over the coming four years, even as its total assets under management rise.
Olafson brings to Arcapita more than 15 years of experience in Asia real estate. He was most recently senior vice-president in Lehman BrothersÆ global real estate group and spent eight years building and managing a portfolio of real estate principal investments in Southeast Asia on behalf of the US investment bank.
At Arcapita, Olafson will focus on building a portfolio of real estate investments in the Asia-Pacific region, including Japan and Australia.
Arcapita only invests in assets that are shari'ah compliant, explains Olafson in an exclusive interview with FinanceAsia, and prefers to take majority stakes and have control of its investments. But this is not a prerequisite and Arcapita could also take a minority position if the asset meets its investment criteria and, further, if Arcapita is able to work around its investment constraints to ensure it does not miss out on opportunities. So, for example, Arcapita cannot own hotels but if it invests in a mixed-use development that includes a hotel component, it could enter a forward sale contract for specifically the hotel.
Arcapita seeks to deploy a minimum of $150 million and can go up to $500 million per deal. "We anticipate opportunities at the first stage in China, Australia, Singapore and Japan," says Olafson "But we are also looking at markets like Korea and Thailand."
A number of the investments Olafson worked on at Lehman were debt-driven and not equity-driven, thus he will not be able to bring Lehman's aggressive approach to real estate investing to Arcapita, he adds. But he is optimistic that the real estate market in Asia is ripe for mezzanine funds and Arcapita is exploring the opportunity to launch one.
"Arcapita's investment plans are not at all affected by the economic slowdown," adds Olafson. "The current volatility has only made us a little more cautious and slowed us down maybe by six weeks."
Arcapita has offices in Bahrain, Singapore, Atlanta and London. Its principal lines of business are corporate investment, real estate investment, asset-based investment and venture capital. It has completed 72 deals with a total value of around $27 billion.
Deals already announced by Arcapita in the region include a $473 million residential housing investment in 14 major cities in Japan; a $650 million investment in a Raffles City mixed-use waterfront development in Bahrain; an investment in a S$500 million ($338.5 million) fund to develop business parks in India; and, most recently, a joint venture in Singapore to acquire a S$1.7 billion industrial portfolio.
They have teamed up with each other and with overseas investors to boost investment capacity in real estate and infrastructure investments in Europe and North America.
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