Angelo, Gordon captures $100m for second Asia fund

The New York-based alternative assets firm has increased the firepower of its AG Asia Realty Fund II after US pension fund the Oregon Public Employees Retirement System committed $100m.

Angelo, Gordon & Co, the New York-based alternative investment firm, has won a $100 million commitment to its second pan-Asia real estate fund from the Oregon Public Employees Retirement System.

According to documents from the meeting of the Oregon Investment Council made public this week, the pension fund will commit the $100m on the condition Angelo, Gordon raises more than $500 million for the vehicle which was launched last year. Should it not meet that minimum requirement, Oregon will commit up to 20 percent of the fund’s total equity.

Angelo, Gordon, which is led in Asia by managing director Wilson Leung, launched the fund last February. At that time the firm was aiming to garner $1 billion in commitments but, according to the Oregon Investment Council, it has now set a total commitments target of between $550 million and $650 million.

The vehicle will seek investments in growth markets and recovering distressed markets throughout Asia, the pension fund highlighted. It will seek net IRR returns of 20 percent from investments in markets including China, South Korea and Japan, where it recently established a presence following the appointment of Jon Tanaka as managing director and country head last October. Tanaka joined from RREEF.

Angelo, Gordon’s first Asia fund, AG Asia Realty Fund I, closed on $526 million in 2006 and is now fully invested. According to the Oregon pension fund, the fund is currently projecting a return of approximately 13 percent IRR and a 1.5 times equity multiple. Oregon said that while the return projection was lower than their initial target return of 20 percent net IRR, it was still competitive when compared to fund level returns of other pan-Asia real estate strategies of the same vintage years as the Fund I investments were made.

The Oregon Public Employees Retirement System currently has a real estate allocation of 11 percent. The pension fund commits equities to various strategies across the risk spectrum from which it aims to achieve a total yearly return of 8 percent.

It said its three-year annualised return as of 31 December 2009 was 11.02 percent. It also said its value-added and opportunity investments made from early 2008 had suffered from value reductions and debt maturities. However, of the $2.875 billion of approved commitments to such high risk strategies made between 2007 and 2008, remained 50 percent uncalled.