The Korea Scientists & Engineers Mutual-aid Association (SEMA) and an unnamed Nordic investor have joined Första AP-fonden (AP1) in a new fund of funds targeting European ‘secondaries’.

The three investors are providing a total of €300m for the Aberdeen European Secondaries Property Fund of Funds, which will seek to buy investors out of existing real estate funds.

Aberdeen announced AP1 as the cornerstone investor last year, having committed €151.5m. Aberdeen said the follow-up commitments meant the fund of funds hit its €300m limit ahead of its final closing date in September this year.

It shows interest among investors for secondaries, a fairly new activity for real estate when compared to private equity markets where there is a deep and established secondary market for funds.

A recent study by real estate secondaries specialists Landmark Partners found that trading of stakes in closed-ended property funds soared by 50% in 2013. A separate study by Setter Capital estimated that $5.1bn real estate fund interests were traded last year, accounting for 14.2% of a wider universe included private equity vehicles and hedge funds.

Last week, private equity fund manager StepStone announced it had moved into real estate secondaries by acquiring Clairvue Capital Partners. 

Aberdeen’s fund of funds has already invested 38% of the €300m in eight funds with exposure to more than 200 properties in Europe.

The fund manager said the investments had been sourced mainly from institutional investors that were seeking to rebalance portfolios as they changed strategies or because of regulatory pressures.

Aberdeen is targeting value-added-type returns through discounted exposures to “stabilised and de-risked portfolios”.

The company manages approximately €2.5bn of European multi-manager mandates. It has made over 100 investments in property funds in Europe and sits on advisory boards in more than half of these.

Topics