ARA reaches $1bn final close for SE Asia-focused fund

Singapore-based ARA Asset Management’s China-ASEAN Investment Cooperation Fund II has reached a $1 billion final close.

The firm has entered a partnership with the Export-Import Bank of China for the closing, with the bank as the main anchor sponsor of the fund. Committing to the fund alongside the bank and ARA are Gezhouba Group Overseas Investment Corporation and China Road and Bridge Corporation.

Speaking with Infrastructure Investor, ARA head of infrastructure investment Kanishk Bhatia said the fund will invest across a range of infrastructure sectors, including transport, energy and digital infrastructure assets in Southeast Asia, and is currently evaluating a number of opportunities in Vietnam, Indonesia and the Philippines.

“That’s the mandate and, within that universe, there’s a strong focus on renewables and sustainable infrastructure assets,” Bhatia said.

ARA is a wholly-owned subsidiary of real assets manager ESR, which acquired the firm in January. CAF II marks ESR’s first foray into traditional infrastructure, having previously focused largely on managing real estate assets. The company also has a long history of building logistics centres and recently raised more than $1 billion for the first close of its Asia-Pacific-focused inaugural data centre fund, ESR DC Fund 1.

“From a traditional infrastructure investing standpoint, [CAF II] is unique within ESR Group and ARA Private Funds, the division within ESR Group that will be managing this product,” ARA chief executive Moses Song told Infrastructure Investor.

“In a very broad sense, if you include the peripheral aspects of the sector [such as] logistics and cold storage warehouses, for example, the group has been involved with infrastructure-related assets since early days. But this product is unique because it will focus on the more traditional asset classes within the sector, such as toll roads and ports, as well as renewable energy, which is very distinct from the existing ESR and ARA business.”

Within the renewables space, the fund will initially focus on more established subsectors – namely, solar, wind and hydro – rather than early-stage, experimental renewable energy technologies, Bhatia said.

“We won’t exclude [newer renewable energy technologies] because this fund has a 10-year life and we’ll be investing for the next few years. As technologies like hydrogen and battery storage become more mature, we will evaluate those opportunities as well, but at the moment the focus is more on the more mature renewable energy technologies,” he explained.

Song added: “[Investing in renewables is] particularly relevant today, given the geopolitical outlook globally and the region’s energy demands going forward… it’s an area that’s really ripe for investment.”