Aberdeen launches Asian fund of property funds

The property arm of Aberdeen Asset Management hires Kang Puay-Ju to run its Singapore operations.
An Asian fund of property funds is being launched by Aberdeen Property Investors, the property unit of Aberdeen Asset Management. The fund is scheduled to close in September 2006 with a 12 year tenor, and target fundraising is $600 million with minimum subscriptions of $10 million.

The fund will be managed from Singapore by Kang Puay-Ju, who will work in conjunction with Stockholm-based fund manager Bo Ljunglof. Kang joins Aberdeen from Dutch institutional investor ABP, where she had been working as a senior portfolio manager, establishing that fundÆs private real-estate investment business in Asia.

For this new fund, the estimated target internal rate of return ranges between 13-17% before performance fees. The fund aims to generate a minimum income distribution of 4% per year. Aberdeen declines to make public the terms of its management and performance fees for this fund.

Leverage in the fund will be capped at 70% and it is expected that it will invest in approximately eight underlying property funds across Asia.

ôThe fund has a life of up to 12 years, however the actual life will be a function of the underlying investments,ö says Anders +str÷m, managing director of Aberdeen Property Investors Indirect Investment Management in Sweden. This fund will not re-invest which means that capital paid out from the underlying investments will be paid back directly to the investors less the fundÆs costs. This will take the form of income distribution, capital gains and capital paybacks.

+str÷m adds: ôWhen looking at funds in Asia today the average duration is approximately five to 10 years, which would mean that the average time until drawn capital is paid back is approximately seven to eight years.ö

The fund has no redemption mechanism which means that investors should look to being invested in the fund for the full life of the product. However, investors can sell the units to other institutional investors.

Aberdeen Property InvestorsÆ real-estate strategies have approximately $11.5 billion in assets under management. The firmÆs first fund of property funds was launched in Europe in 2005 and raised $800 million.

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