SC Capital has invested most of its US$850m (€788m) real estate fund, allowing it to begin capital raising for a successive vehicle.
The Singapore-based company has deployed 75% of the capital in its Real Estate Capital Asia Partners (RECAP) IV fund, enabling it to talk to existing investors about the next fund.
It plans to launch RECAP V in May and could target up to US$1bn in capital.
“We have an agreement with our [limited partners] to start a new fund when 75% of the funds raised in our fourth fund have been deployed,” said Suchad Chiaranussati, SC Capital’s founder and managing director.
“We will be looking to raise US$850m, but, very likely, we will round it up to US$1 billion.
“RECAP IV attracted interested parties offering US$1.3bn. It was far more than required.”
Chiaranussati said SC Capital’s priority is always to open new funds to existing investors first before offering them to the wider market.
IPE Real Estate understands that both existing and potential new investors are expressing an interest in the new fund, which, like its predecessors, will invest in value-add opportunities.
Chiaranussati said the launch is being timed to take advantage of potential dislocation in property markets across Asia Pacific.
Given the uncertain global outlook, he said, correction would take place in some markets.
“Australia will be one of them, and Japan will be the other,” he said.
“Singapore has corrected and is slowly finding the bottom. Similarly, the Hong Kong market is bottoming out.”
The RECAP funds have attracted mostly US state pension funds, including City of Fort Worth Employees’ Retirement Fund and City of Phoenix Employees Retirement System.
But Chiaranussati has observed a broadening of its investor base to include European and Asian institutions.
“Our deployment of equity each year, on average, is US$400m to US$600m. In terms of asset values, our buy-and-sell transactions vary between US$1bn and US$2bn a year.
“About 20% of our risk exposure is to Japan, another 25% to Australia and 30% to Southeast Asia.”
The RECAP funds have also provided loans to development projects. Chiaranussati said there is not enough liquidity in the market because foreign investment banks are withdrawing.
SC Capital is now contemplating launching a debt fund, because of the “good experience” over the past decade, Chiaranussati said.
“We are not planning one right now as we are still raising two funds,” he said. “[But] it is something that could happen” in the near future.
SC Capital is also continuing to raise for the SC Capital Asia Core Fund, its first pan-Asia core fund.