Aerium, FGG launch EUR 1.8bn pan-European opp fund

London-based financial services group Aerium and asset manager Fairfield Greenwich Group (FGG) are launching a EUR 1.8bn opportunity fund to invest in European real estate.

The pair said Aerium Fairfield Special Opportunities Fund will focus on European markets, which, as a result of tighter credit conditions globally, are set to provide 'opportunities for greater capital appreciation than has recently been available.' The Luxembourg-regulated SIF-FCP vehicle will target an internal return on investment (IRR) of 15-20%.

Franck Ruimy, head of Aerium, said investors still have an appetite for European real estate. 'We are continuing to see fragmentation in the property markets across Europe providing us with significant opportunities to find investments that fit with our tried and tested investment strategy in both established and emerging locations.'

The fund aims to raise EUR 500mln in equity and use gearing to build up a warchest of EUR 1.8bn to take stakes in developments or land and to invest in the office, retail, residential, hotel and logistics sectors. In addition to straight acquisitions, the fund will seek to get involved in mezzanine lending and in transactions involving public real estate enterprises.

The fund has a wide geographic remit. It will look for opportunities in Western Europe, Central and Eastern Europe and Turkey. The parties said that the fund's ability to provide adequate equity in an environment of tighter lending, combined with Aerium and FGG's relationship with active lenders would be key to taking advantage of the current market conditions.

'With our large asset management team based across Europe we believe we are strongly positioned to deploy the equity in a tactical manner to deliver opportunistic style returns,' Ruimy said.

Aerium has EUR 7.7bn of assets under management in Europe and claims to be one of the largest investors in Turkish retail assets. The firm's 10 previous funds have over EUR 3bn in real state assets. The two funds that have been fully realised delivered IRRs of between 28% and 35%.

FGG was established in 1983 and has more than 100 staff in offices in New York, London and Bermuda, as well as representatives in Continental Europe and Latin America. The firm manages more than $16bn (EUR 10.3bn) of its own and its clients' assets.