ARA to launch infra funds management business – exclusive

The Singapore-headquartered real estate investment manager's foray into the asset class will seek to tap Chinese capital and target deals in Asia and Europe.

ARA Asset Management is poised to set up an infrastructure funds management business within the next few months, becoming one of the first few pure play real estate-focused Asian investment managers to venture into infrastructure, taking advantage of growing institutional demand for the asset class.

According to sources familiar with the matter, ARA is currently in the process of hiring a team of investment professionals to run the infrastructure business based out of Singapore. While the core infrastructure team will initially consist of a handful of people, sister publication PERE understands that it will be supported by the firm’s private real estate funds management, legal and research functions.

The move is, in part, driven by the growing preference of Asian investors to increase their global infrastructure allocation, given the stable and long-term income streams offered by the asset class. One of the sources said this strategy would also help to tap Chinese investors’ overseas investment appetite, by directing some of their capital into international infrastructure deals.

While outbound deals in real estate, listed as a ‘restricted sector’ by Chinese regulators, continue to be deeply scrutinised, more strategic investments tied to China’s ambitious ‘Belt and Road’ global infrastructure initiative are being encouraged.

Asia and Europe will be ARA’s target investment markets for infrastructure deals, PERE understands.

ARA’s decision to foray into infrastructure investing is part of the Singapore-headquartered manager’s aggressive global expansion strategy involving a push into new geographies, asset classes as well as product types.

Earlier this month, the firm, which has so far focused on investing within Asia-Pacific real estate, announced its expansion in Europe with the appointment of Mark Ebbinghaus as a senior adviser.

Talking about the Europe strategy, Moses Song, group chief investment officer at ARA, told PERE that the firm is looking to tap on both the local European capital as well as facilitate cross-border investments from Asian capital. “Having a team on ground will also help us take advantage of the growing Asian investors’ demand for investing in Europe,” he said.

ARA has lofty goals for its real estate business, which include increasing its assets under management from S$40 billion ($30.5 billion; €24.6 billion)  to between S$80 billion and S$100 billion in just five years, the industry veteran told PERE in an interview last year.