Four large Australian industry superannuation funds have committed A$500m (€306.4m) to the new open-ended diversified EG Australian Core Enhanced Fund (ACE).
Daniel Farley, fund manager for ACE, told IPE Real Assets that, given the strength of investor demand for core assets, ACE had begun the second round of raising for a further A$500m immediately following this week’s first close.
“This is an open-ended fund and, as such, there is no final close. We are in the process of attracting more equity and expect to raise up to A$1bn over the next 12 months,” he said.
He added that the fund was two years in planning before its launch this week.
“Investors are increasingly interested in the superior risk-adjusted returns that can be realised from assets which can be re-positioned to core, while ensuring that the additional risks are managed by a proven management team,” said Farley.
He said asset prices were high and competition was stiff for core assets.
In the first instance, he said, ACE would target mainly core office and industrial assets on the Eastern Seaboard, primarily in Sydney and Melbourne.
“Retail will also be a natural focus. We feel there will be undervalued assets, which could be acquired for positioning for the next investment cycle. Inevitably, when a sector falls out of favour, the pendulum swings too far (the other way).”
Farley expects such opportunity to emerge over the next 12 months.
He said the fund would acquire assets in the A$20m to A$200m price range.
The fund’s manager, EG Funds Management, is a growing Australian real estate fund manager which currently runs six unlisted property funds, including a vehicle that invests solely in US assets.