GLOBAL - Composition Capital is talking to investors about launching a new European fund of funds, having fully invested its two existing European products.
The fund of funds manager - which has widened its remit to invest in joint ventures and club deals as well as real estate funds - is still deploying capital committed to its Asian fund of funds and recently entered into a joint venture with a Japanese senior housing specialist.
But the company's European offerings are fully invested, having entered into two joint ventures in Germany - one to provide mezzanine finance to commercial real estate developers and another to acquire and manage a large residential portfolio.
In 2010, Composition hired European director Maarten Vermeulen and investor relations director Morag Beers to lead their move into the joint venture space.
Vermeulen said investors were demanding more control and narrowly defined strategies in their real estate investments, and Composition is currently hiring internal staff to better position itself to address this.
"Structuring and managing a joint venture is not just something you can do easily," he said.
"Investors need to realise they will be involved in all major decisions related to the acquired portfolio - there are very few investors that are staffed for that."
He added: "They will have to have the capacity to act quickly and fly, for example, to Berlin from New York to give their approval for a deal.
"You need different skill sets. You need to equip your company and potentially hire new staff to add this strategy."
Composition's Asian fund of funds is expected to be fully invested by the end of 2011, but the company's European team has moved its attention to launching a new product.
"We don't know yet what kind of product because we see that fundraising is challenging," Vermeulen said.
What form the new fund of funds will take remains unclear, but Vermeulen said it was likely that it would feature fewer target countries in Europe, focusing on the more mature, stable economies and excluding central and eastern European ones.
"We are getting close to identifying which strategies we like for the respective countries we are focusing on," he said.
