Ayala Corp, ALI to invest $75M in HK-based private equity fund

Conglomerate Ayala Corp. and its property unit Ayala Land Inc. (ALI) will invest as much as $75 million in Arch Capital Management Co. Ltd., a Hong Kong- based private equity fund that will explore property markets in Asia, particularly China, India and Thailand.

In a statement issued yesterday, Ayala said the projected size of the fund is $200 million.

The investment will be made through Ayala International Pte. Ltd. (AIPL), a 100 percent-owned subsidiary, which has a strong record of experience in direct property investments in Asia and the United States.

ALI and AIPL will both participate in the fund management company, which will raise third party capital and pursue investments for the fund.

Ayala Corp. president and chief operating officer Fernando Zobel de Ayala said, "this investment is part of Ayala’s broader strategy to expand its presence and explore new growth opportunities overseas by leveraging on the strengths and competencies of our core subsidiaries. This is a suitable time to participate in the emerging growth opportunities in the Asian property market given that market conditions have consolidated and improved significantly following the years of the Asian financial crisis."

ALI president, Jaime Ayala, for his part, said: "The potential equity returns on the fund’s investments present a significant opportunity for material, long-term growth for the company outside of domestic growth channels. In addition, ALI’s participation in the fund will create new revenue streams for the company in the form of fees for development-related services. The fund presents an ideal opportunity to leverage Ayala Land’s core skills and extensive development experience."

AIPL, Ayala’s vehicle for international property investments has been actively investing in Asian real estate since 1995 in countries that include Japan, Australia, Hong Kong, Thailand and Malaysia. Total investments made over that period exceed $200-million covering residential development, office and retail redevelopment, and select public company restructurings.

AIPL Charles Cosgrove, President of AIPL, said, "AIPL’s 10-year record of partnering in markets across Asia, combined with Ayala Land’s property development skills and competencies, complements Arch Capital’s specialized deal sourcing and structuring abilities, particularly in China. Asian markets are presently characterized by largely normalized, non-distress conditions and such a multi-faceted, value-adding approach will provide important advantages in the period to come as large amounts of investor capital continue to look for investment opportunities in our region."

Ayala is an established and trusted Asian conglomerate with privileged access to key players and decision-makers through its extensive network of contacts in the region.

ALI, on the other hand, has established a proven track-record for quality and success in real estate development, with core skills and competencies in product design, project development, and development and construction management. The company has consistently achieved both financial and product success and has in the process developed the skills necessary to be successful both in emerging markets and through the turns in the property cycle.

Ayala said the fund will be managed by Yue, Wah-Chuk Richard who has over 17 years of experience in investing over $ 3 billion in Asian real estate.

Yue and the Arch Capital management team bring strong deal origination, execution, and fund management experience in regional markets. Their experience base spans real estate investment, property development, project management, banking and capital markets, corporate finance, mergers and acquisitions, and REIT structuring and securitizations.

Arch Capital plans to begin formal marketing efforts to potential investors in the fourth quarter of 2006 and expects to have its first closing in 2007.