Cargill Investment Arm to Start $500M Fund in Japan

CarVal Investors plans to launch its first Japan real estate fund later this year to raise about $500 million; Cargill has committed $200 million to the fund.

Wayzata-based Cargill, Inc.'s investment subsidiary-CarVal Investors-will reportedly launch its first Japan real estate fund in a few months to raise about $500 million to invest in distressed assets.

According to Reuters, Cargill has already committed $200 million of seed money to the fund, which will have a life of five years, including a two-year investment period.

Yojiro Koizumi, a senior partner at CarVal Investors, told Reuters that the investment firm will look at opportunities in non-performing loans such as commercial mortgage-backed securities, non-recourse loans, or performing loans that cannot be refinanced.

Reuters cites two research firms that gave statistics about the current market in Japan: According to Tokyo Shoko Research, the number of bankruptcies in Japan rose in May for the first time since July 2009, largely due to the massive earthquake in March. And property research firm DTZ estimates that the amount of debt that cannot be funded in Japan is more than $80 billion.

Koizumi told Reuters that the fund will aim for a 15 percent internal rate of return with a short investment period to boost returns.

“We usually buy assets which are at distressed prices for whatever the reason is and repair it and exit it in two years,” Koizumi told the news outlet.

According to Reuters, CarVal Investors targets opportunistic property investments and has invested nearly $10 billion globally-about 10 percent of which has been allocated to real estate. Click here to read more from Reuters about the fund.