Middle East and European capital makes up for smaller US contribution
Pan-European opportunistic investor Patron Capital has “exceeded its expectations” and raised €880m at the final closing of its fourth fund, although commitments from US investors fell.
Patron’s managing director, Keith Breslauer, said the latest vehicle raised slightly more than the firm’s third fund, launched in 2007, despite the environment for capital raising still being “unbelievably hard”.
He added: “It took a bit less than a year. Patron Capital Fund III took about a month and was three times oversubscribed.” Breslauer said about 55% of the capital came from previous investors in fund three, who generally made smaller investments this time.
Fund IV has about 100 investors, with the largest owning almost 9%. “The new investors were mostly from the Middle East and Europe; they took up the amount that reduced from the US,” he added. “Fund three was overwhelmingly US investors.”
Patron’s experience confirms reports this year from other investment managers, who say fewer US investors are prepared to commit to the string of follow-on European opportunity funds that are currently hoping to raise capital.
Patron’s total includes €780m in the fund and a €100m discretionary co-investment pool, which Breslauer said came from an investor that wanted to invest more, but not in the fund structure.
Both have invested in the acquisition of distressed Dutch property company Uni-Invest, the deal Patron has just closed with TPG and one of three investments Fund IV has already made, accounting for around €130m of capital.
The others are Luxury Family Hotels, the distressed Von Essen Properties that Patron and 5% investor Halcyon Hotels bought last December for £38.3m; and retail/petrol stations chain Motor Fuels Group.
Fund IV, which with gearing could invest up to €2.5bn, will focus on distressed opportunities in western Europe. Breslauer said Patron Capital’s staff had €35m of capital co-invested across the firm’s funds.
Monument Group was the placement agent for Fund IV. A Townsend Group report warns that many funds trying to raise capital are finding it hard to reach their targets.
Townsend is the largest adviser on indirect investing to US pension funds. Its annual Real Estate Fundraising Report says that there are more property funds in the market this year than last: 562 globally, compared with 505 in 2011.
But the real estate general partners surveyed by the firm had only raised $6bn so far during 2012 of the $90bn they were looking for.
At 379 by number, by far the majority of funds are targeting the US, while 70 are targeting European developed markets and 61 Asian markets.
Area Property Partners is using placement agent Park Hill to help raise a targeted €750m for its fourth European real estate opportunity fund.
The manager, which started fund raising last Spring, will also be raising funds for Area US Value Enhancement VIII.