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Monday, April 14, 2008

Merrill, CLSA raising big Asian property funds

BOAO (China): US investment bank Merrill Lynch and Asian brokerage CLSA are separately raising investment funds focused on Asian property, indicating continued confidence in the region's economies, executives from the two companies said at the weekend.

Merrill Lynch is raising a Pacific Rim real estate fund worth around US$2.5-US$3 billion, (US$1 = RM3.15) Damian Chunilal, Merrill's head of Pacific Rim origination,said yesterday.

It will invest in a variety of types of property across the Pacific Rim, including in India, Australia, Japan and the rest of Asia, he said.

CLSA Asia-Pacific Markets is raising a new roughly US$1 billion pan-Asia property fund that will focus on China, Japan, Taiwan, Hong Kong and Singapore, chairman Rob Morrison said.

Both executives were speaking on the sidelines of the Boao Forum for Asia, being held on the southern Chinese island province of Hainan.

The launch of the funds comes at a time when many investors are looking to Asia as a safe haven in the wake of the credit crunch set off by US subprime woes, as others shop for deals in the US and Europe.

Merrill's fund is part of an increasing push by the largest US brokerage to build up third-party funds to do principal investing, Chunilal said.

"That's very much going to be a model that's repeated in the future with different types of funds," he said. "That's something we are very actively exploring at the moment."

The firm is also currently raising a European real estate fund, Chunilal said, without providing details. He added that other new funds could focus on private equity and possibly infrastructure.

Morrison said CLSA's fund would look to invest about 20-30 per cent of its cash in China. CLSA is the Asia-focused brokerage and investment banking arm of French bank Credit Agricole.

Other global investment banks are also planning to launch funds for Asian property. UBS recently said it plans to launch a roughly US$1 billion fund for investing in China.

Morgan Stanley and global investment firm Blackstone Group are also active in real estate in the region.

While European and US property markets are waning in the wake of the global credit crunch, Asia still shows signs of strength, recording a 26 per cent jump in direct property investment to US$121 billion in 2007, according to consultant Jones Lang LaSalle.

By Reuters

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