Hong Kong-listed real estate group ESR has raised $2 billion through 15 new or upsized funds and mandates — 80% of which are dedicated to the new economy sector — in the first six months of this year, amid a global fundraising drought.
The warehouse giant on Wednesday announced the second close of its data centre fund, also known as ESR Data Centre Fund I, which was upsized to $1.3 billion with a commitment from an unnamed global investor.
In Southeast Asia, the group also held the first close of its development fund for Indonesia assets and a new mandate in Vietnam, ESR said in the first-half earnings call without divulging further details.
At least eight funds of ESR are active in the market, including development funds for Japan (RLJF IV) and Australia (EADP III); and dedicated core funds for South Korea, China, Singapore, and Australia among others.
The group on Tuesday announced that it had launched its largest RMB income fund in China with a total investment capacity of around 10-billion yuan ($1.3 billion).
ESR said in a release that it is well-positioned to achieve an acceleration in fundraising over the next six months as rates start to stabilise.
Real asset and fund managers in the private alternative world have been contending with a high-rate environment which creates tough market conditions for them to raise capital.
Hong Kong-based private equity firm PAG recently gathered $1.8 billion in the final close for its third Asia-focused core-plus realty fund, which is smaller than the second instalment of the same series that notched up $2.25 billion in 2019.
“Uncertain market conditions that have prevailed since the middle of 2020 affect timing in many aspects of business activity, from transactions to capital raising, and ultimately deployment…” said Jeffrey Perlman, chairman of ESR.
“Having said that, our stated strategies and targets remain on track as we work harder in this environment to drive our fundraising and capital recycling initiatives.”
ESR’s half-year EBITDA was down by 15.6% from $637 million in the first half of 2022 to $550 million in the same period this year. Fund management EBITDA, which accounted for 50% of the group’s EBITDA, grew 18% year-on-year during the period ended June 30, driven by a higher margin based on higher fee revenue, cost discipline, and continued economies of scale.
Shares of ESR closed at HK$11.74 apiece on the Hong Kong Stock Exchange on Wednesday, representing a 30% decline year-to-date.
The group is also anticipating a public debut of its China REIT in 2023, where it would be ready to divest $1 billion from its balance sheet this year.