Asia Alternatives raises $1.5b, closes third fund

The third vehicle was launched last September with a target size of $800 million. Approximately 75% of investors are existing investors in the fund's predecessors, while a majority of the remaining capital comes from institutional investors from Europe and Asia. Cathay Life Insurance, the Church Pension Fund, Comprehensive Financial Management, Massachusetts Mutual Life Insurance Company and New Mexico State Investment are among its investors.

"Increasing our exposure to Asia is important to the fund's portfolio diversification strategy," said New York State Comptroller Thomas P. DiNapoli, trustee of New York's $150 billion Common Retirement Fund, another LP in the vehicle. "Asia Alternatives has the pulse of the local markets and provides New York Common with additional insight into the dynamic investment landscape in the region."

While there were only a few fund-of-funds several years ago, market sources indicate that there are around 40-50 now. The mismatch between a large supply of managers but limited demand from institutional LPs - in the face of a tougher fundraising environment - suggests consolidation is likely to take place.

Melissa Ma, co‐founder and managing director of Asia Alternatives, told AVCJ that local experience and on-the-ground investment capability will be increasingly important for attracting institutional investors.

"We have a team of 29 people from offices in Hong Kong, Beijing, Shanghai and San Francisco and we are the first fund-of-funds that has a team on the mainland," she said. "Late last year, we also become the first LP ever to receive a QFLP (Qualified Foreign Limited Partner) license in China. I'd say a significant amount from our third fund will be invested into renminbi‐denominated vehicles - an exciting first-time opportunity for our team."

Founded in 2006, Asia Alternatives closed its first fund in April 2007 at $515 million and subsequently raised $950 million for its second vehicle in 2008, just several days before the fall of Lehman Brothers. Since then, large investors have become subject to tighter regulatory controls.

The separate accounts of Asia Alternatives - which are tailor-made for investors whose investment restrictions prevent them from participating in a co-mingled fund - have the same fee structure and will invest in the same investment pool as Fund III. The majority of investors with these accounts are understood to be US public pension funds.

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• Topics
• Fund-of-funds
• Fundraising
• Asia Alternatives Management
• Fundraising
• Fund-of-funds