ESR co-CEO Stuart Gibson
ESR on Monday announced the creation of an ASEAN-focused infrastructure fund led by the industrial specialist’s wholly owned subsidiary ARA Asset Management and powered by an anchor investment from mainland policy lender Export-Import Bank of China.
Seeking to capitalise on economic growth and infrastructure demand in Southeast Asian nations, China-ASEAN Investment Cooperation Fund II has secured $1 billion in commitments from ARA, the Beijing-based bank and state-controlled enterprises Gezhouba Group Overseas Investment Corporation and China Road & Bridge Corporation, ESR said in a release.
CAF II will invest in ASEAN countries across various infrastructure, energy resources (including renewables) and ICT sub-sectors, according to ESR.
“Our move into the infrastructure and renewables business further strengthens our competitive edge as a fully integrated one-stop solution for our capital partners and customers,” said Jeffrey Shen and Stuart Gibson, ESR’s co-founders and co-CEOs. “We are confident that the infrastructure fund is well-positioned to benefit from robust long-term macroeconomic trends in ASEAN including rising incomes, rapid urbanisation and favourable demographics.”
Beijing’s Bloc Party
CAF II is the follow-up to CAF I, a dollar-denominated offshore “quasi-sovereign equity fund” sponsored by the Export-Import Bank of China and investing in infrastructure, energy and natural resources with a target fund size of $10 billion.
ESR co-CEO Jeffrey Shen
For the latest vehicle, ARA Private Funds’ infrastructure arm has been appointed as investment advisor by the bank to pursue opportunities with a strong focus on sustainability and ESG standards.
ARA CEO Moses Song said CAF II would play a part in building connectivity and economic, trade and investment cooperation in ASEAN, the 10-nation bloc headquartered in its largest city, Jakarta.
“We are excited to have expanded into a new asset class and we have established a specialist infrastructure and renewables team, leveraging the resources across the group, to steer the business as we continue to accelerate our growth in size, scale and offerings,” Song said.
Assets under management in the infrastructure sector will experience a compound annual growth rate of 16.6 percent, rising from $86 billion to $1.87 trillion in the 2021-2026 period to overtake real estate as the largest real asset class, ESR said, citing a forecast by investment data firm Preqin.
Powering Through the Slump
While APAC industrial investment volume as measured by MSCI Real Assets fell 24 percent year-on-year to $8.7 billion in the third quarter, Hong Kong-listed ESR continued its fundraising efforts in support of several regional strategies in recent months.
In September, ESR launched the third in its series of core-plus logistics funds focused on the Australian market, with financial support provided by its longtime partner, Singapore sovereign fund GIC. ESR Australia Logistics Partnership III received an equity commitment of A$600 million ($410 million), equalling the fundraising haul achieved by each of EALP I and EALP II.
Later that same month, ESR and its Logos subsidiary announced a $250 million closing for their inaugural Asia core-plus logistics fund, boosted by a $100 million commitment from the Employees Retirement System of Texas.
October brought news of the A$540 million first closing for the second iteration of an Australian develop-to-hold logistics partnership of ESR and GIC, and in early November the pair extended another existing partnership to set up a $600 million joint venture to acquire income-producing core industrial and logistics assets in India.
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