Mara, Al Rajhi to launch US$200m fund

KUALA LUMPUR: Pelaburan Mara Bhd (PMB) is partnering Al Rajhi Group’s AEP Investment Management Ltd (AEPim) to set up a US$200 million (RM636 million) private equity fund for investing into global real estates, with an eventual goal of listing the assets as a real estate investment trust (REIT) in a major exchange.

PMB’s newly appointed group CEO Nazim Rahman told The Edge Financial Daily that the fund, called Basil Fund, is registered under the Monetary Authority of Singapore and will be launched on Oct 21.

“We are in active discussions with investors from Qatar, Brunei and Saudi Arabia to join as investors in the Basil Fund,” he revealed.

Nazim, who joined PMB in the middle of July, said the genesis of this Basil Fund will propel PMB into the international property markets and give it the opportunity to collaborate with AEPim, where it could leverage on the latter’s track record, international presence and access to Syariah-based capital across multiple markets.

“Also, the investment into the fund will give PMB a recurring income and since we will be managing the fund, w e will also be entitled to receive management fees,” he said.

According to a slide presentation, the Basil Fund will amass a portfolio of income-generating “business space properties” across key Asian and European markets.

The fund aims to achieve an overall internal rate of return (IRR) of above 15% annually, which will be underpinned by regular dividend payments that are projected to be at least 5% per year. It will be set up in Singapore as a private trust or a private limited company to hold the status of an Enhanced Tier Fund.

As the fund’s sponsors, PMB and AEP Capital (parent of AEPim) will each raise US$25 million while seeking another US$75 million from cornerstone investors by January 2014. Another round of fund-raising for US$100 million will be done by June 2014.  

Nazim said the fund will acquire property assets by both cash and debt, and intends to have a gearing level of about 60% of the property value. With a US$200 million equity and supported by borrowings or debt financing, the aim is to grow the assets under management to about US$450 million, which will be the desirable size for the assets to be listed as a REIT.

The presentation showed the Basil Fund aims to focus on assets in Singapore, Australia, Southeast Asia, and Europe. It targets properties in the forms of suburban offices, business parks, retail warehouses, light industrial areas, and logistic and data centres.

“Our targeted assets will be in developed markets only to ensure that the investments are safe and stable,” said Nazim.

Based in Singapore, AEPim is a unit of Saudi Arabia’s Al Rajhi group. It has previously raised US$220 million in equity for its Securus Data Property Fund to invest in six data centres across Australia, Asia and Europe with total assets under management of US$530 million and is delivering annual dividends of more than 8%.

Meanwhile, Nazim said the 46-year-old PMB currently has a total asset size of about RM700 million, which is managed by its various subsidiaries. The bulk of the assets under its management is blue-chip stocks.

Formerly known as Amanah Saham Mara Bhd, PMB will join other government-linked investment companies such as Ekuiti Nasional Bhd and the Employees Provident Fund in investing in private equity.

This article first appeared in The Edge Financial Daily, on October 07, 2013.



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