Claret invests $100m in Asian property fund

Dublin-based Claret Capital has invested $100 million (€67.4 million) in an Asian property fund run by Merrill Lynch.

The US investment bank has raised $2 billion in equity to invest in commercial, retail and residential property in Asia-Pacific, primarily in Japan, China, India and South Korea. The fund has already completed 33 transactions with a total equity value of about $795 million.

This is Claret's biggest single investment to date. It has previously spent about $125 million with Merrill Lynch on a number of other deals, including the takeover of car rental group Hertz, hospital operator HCA and a casino and leisure complex in Macao.

Headed by Dómhnal Slattery, Claret manages investments on behalf of a number of wealthy Irish people, including Feargal Quinn and his family.

When leveraged with debt, the Asian Real Estate Opportunities Fund will have about $7 billion to invest over the next three years. It is targeting an internal rate of return to investors of 20 per cent.

Mr Slattery said Claret has been seeking an entry point into the Asia-Pacific property market for some time. "When Merrill Lynch came to us two months ago we liked this investment for a couple of reasons," he said. "Firstly, the scale of the investment and secondly the fact that they are committing $800 million of their own money to the fund. So there's a fundamental alignment of interests of all investors."

Claret's decision to back the fund comes at a time when stock exchanges are in meltdown and the US property market has been rocked by the subprime crisis.

"We have decided to be a contrarian investor," Mr Slattery said, adding that he expects the major Asian economies to outperform over the next decade.