Hillhouse’s Rava Expands Australia Push With Majority Stake in Fund Manager Barwon

Rava Partners has agreed to buy a majority stake in fund manager Barwon Investment Partners, extending the real asset unit of Hillhouse Investment’s push into Australia’s alternative property sector, according to sources familiar with the transaction who spoke with Mingtiandi.

The deal gives Hillhouse Investment-backed Rava control of a manager overseeing A$3 billion ($2.1 billion) in healthcare real estate, real estate credit
and private markets, with the story having been first reported by the Australian Financial Review. With Barwon having built a portfolio of doctors’ offices, outpatient clinics, medical labs and private hospitals over its 20-year history, Rava sees the company as offering a defensible strategy of investing in healthcare properties which is executed by a team with a deep understanding of the industry. 

This investment reflects Hillhouse’s global strategy of partnering with leading management teams to build and scale real asset platforms in markets where we see long-term opportunity,” Hillhouse partner and Rava co-head Joe Gagnon said in a statement. He added that, “Australia is an important market within our Asia Pacific portfolio, and Barwon provides a compelling opportunity to expand our footprint.”

Rava sees the acquisition as enabling further expansion of Barwon, with the transaction coming six months after the real asset fund manager, through its Japanese accommodation operator Samty, took a majority stake in Australian student housing operator UniLodge in a deal valued at A$600 million. The Singapore-based firm has invested in build-to-rent residential and logistics in Australia, with Barwon now ranking alongside Unilodge as its largest investments in the country, according to market  sources.

Demographics Play

Founded in 2006 by former AMP Capital property head Rob Morrison and former Macquarie alternatives head Sam Armstrong, Barwon specialises in healthcare property, private credit and real estate investment strategies. The firm raised A$150 million for its Barwon Institutional Healthcare Property Fund in March of last year, according to local media reports, with that vehicle representing one of its three healthcare-related strategies, alongside the Barwon Healthcare Property Fund and the Barwon Disability Accommodation Fund.

Rava intends to keep managing partners Tom Patrick, Jonathan Pullin and Peter Conners at the helm of Sydney-based Barwon after the transaction, the sources said, and plans to continue to expand the healthcare property specialist in Australia while eyeing opportunities for overseas expansion. “Hillhouse’s investment will strengthen our business while preserving our team and client focus and ensuring long-term succession and continuity,” Barwon’s management said in the statement.

With Australia’s population set to expand from 27.5 million last year to 31.5 million in 2035 to 2036, according to official statistics, at the same time that the country ages, Barwon sees its healthcare strategies benefiting from demographic tailwinds, with its Healthcare Property Fund providing yields of 5 percent to 6 percent, according to its website, while its Disability Accommodation Fund returns 5 percent to 7 percent. 

The company has been active in Australia’s capital markets, selling the Bunbury Medical Centre in Western Australia from its Healthcare Property Fund in early September last year for A$6.9 million, according to local media reports. In December it sold a medical centre and gym in Adelaide for A$7.27 million after acquiring the asset in 2017 for A$4.95 million, per an account in Real Estate Source.

In late September last year Barwon won approval to develop a privately fund day hospital in Brisbane with plans for an A$350-million project.

“Barwon is a high-quality business with strong momentum and a clear growth trajectory,” Rava managing director Harsh Narang said. “We see meaningful opportunities to support the team in delivering further on existing strategies and helping them to become a market leading manager in their chosen real estate sectors.”

Targeting Specialists

The Barwon acquisition adds to a series of platform investments by Rava as the firm builds out an Asia Pacific real assets strategy focused less on assembling portfolios and more on backing operating businesses with sector-specific capabilities.

Speaking at this month’s Mingtiandi Singapore Forum, Gagnon said Rava is targeting platforms that can expand across markets and property sectors while generating recurring fee income.

The executive said during the forum that the company’s strategy centres on identifying specialist operators with entrenched local relationships and scalable business models in sectors benefiting from structural demand shifts across Asia Pacific.

“What we’re trying to do is work with best-in-class entrepreneurs to try to grow businesses that serve those asset classes,” Gagnon said at the event.

The Barwon investment fits that approach by giving Rava exposure to Australia’s healthcare real estate market through a manager with longstanding relationships across hospitals, medical centres and healthcare operators.

The platform’s focus on alternative property sectors also aligns with Rava’s broader investment themes, which have included student housing, rental residential through regional operator Dash Living and other operationally intensive real estate segments across Asia Pacific.

The Barwon acquisition remains subject to approval from Australia’s Foreign Investment Review Board after the Australian Competition and Consumer Commission determined on Wednesday that no notification was required for the transaction, per the statement.