Arch Capital, the Hong Kong-based private equity real estate firm, has held a final closing of $387 million for its second pan-Asia opportunity fund, ARCH Capital-TRG Asian Partners LP.
The firm commenced marketing the fund in mid 2011, initially targeting up to $500 million and was expecting to wrap up fundraising around mid 2012. However, PERE understands Arch opted for a final close 16 months from initial launch to concentrate its efforts on deploying the capital in what it regards as currently opportunity-rich target markets. Nonetheless, the firm is expected to add to its capital haul with further equity for co-investments.
Arch is understood to have deployed significant resources already, particularly in China where the firm aims to take advantage of tight and restrictive policy and credit conditions for Chinese developers. The firm is also expected to invest in Thailand, Singapore and, for the first time, the Philippines.
Arch declined to comment beyond stating that it was pleased with the final closing given the current tough fundraising market. According to PERE’s Capital Watch, which lists equity raised for value added and opportunity funds, little more than $3 billion has been raised so far during 2012, similar to last year’s total for the region and a remarkable decrease from the $18.4 billion recorded in 2008 at the turn of the global financial crisis.
The firm is understood to have enjoyed a re-up rate of more than 60 percent from its first fund investors at initial closing, and attracted commitments from a total of between 15 and 20 investors at final closing, hailing roughly one third from Europe, one third Middle East and the rest from Asia and North America. The bulk of Arch’s capital was raised for its first closing –$220 million in June 2011. It raised another $84 million in December last year in a second closing. The final close was done at the end of September this year.
Arch Capital-TRG Asian Partners LP follows the firm’s debut fund, Arch Capital Asian Partners LP, which closed on $330 million in 2007. Then, the firm was owned 50:50 between chief executive officer Richard Yue and Philippines-based Ayala Corporation. In March 2011, Ayala entered into a share swap with New York-based emerging markets firm The Rohatyn Group (TRG) in which it exchanged its shareholding in Arch Capital for a larger stake in TRG. Ayala has remained a cornerstone investor in Arch's two funds, however.