[E-Daily Marketin KIM SUNG-SOO Reporter] Although the acquisition of Aegis Asset Management by global private equity fund (PEF) manager Hillhouse Investment has fallen through, analysts suggest that the possibility of cooperation between the two companies remains open.

Although the merger and acquisition (M&A) between the two companies did not materialize, analysts note that the likelihood of future collaboration is significant, given that both firms are focusing their efforts on expanding into real estate markets in the Asia-Pacific (APAC) region, including Japan. Accordingly, it is anticipated that other forms of partnership—such as joint investments or the establishment of joint ventures (JVs)—will follow in the Asian real estate market.

Hillhouse and Aegis Find ‘Common Ground’ in Japanese Multifamily Investments

According to the investment banking (IB) industry on the 9th

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analysts suggest that the collapse of Hillhouse Investment’s (hereinafter “Hillhouse”) deal to acquire a controlling stake in Aegis Asset Management does not signify a “complete breakup” between the two companies.

In particular, given that both companies are focusing their efforts on expanding into the Asia-Pacific (APAC) residential (multi-family) market, including Japan, there is a significant possibility of future collaboration.

“Multifamily” refers to corporate-style rental housing where multiple households reside within a single building or complex. Typically consisting of 100 to 300 units per complex, these properties are popular among middle-class and higher-income tenants, as professional management companies operate high-end amenities such as fitness centers and lounges.

In particular, multifamily properties are one of the largest asset classes in the U.S. commercial real estate market and are considered an attractive investment opportunity that generates stable cash flow compared to the office market.

In 2020, Hillhouse spun off its real asset investment division to establish Lava Partners. Lava Partners is rapidly expanding its residential and lifestyle investment platform across Asia, with a focus on Japan, as evidenced by its acquisition of Samti Holdings, a Japanese residential and hotel development company, last October.

Rava Partners is led by Joe Gagnon (pictured below), a Hillhouse partner and real-asset investment expert. As co-CEO of Rava Partners, he plays a pivotal role in building a real-asset and real estate investment platform across the Asia-Pacific region.

Before joining Hillhouse, Joe Gagnon spent approximately 15 years (2005–2020) as a managing director and partner at the global private equity firm Warburg Pincus, where he led the Asian real estate investment division. He subsequently served as co-CEO from 2008 to 2012 and as sole CEO from 2012 to 2020, spearheading investments in various real estate platforms.

Prior to that, he worked as a business development manager at GE Real Estate in Tokyo, where he gained investment experience in the South Korean commercial real estate market. Since then, he has continued to maintain his network in the South Korean market while identifying investment opportunities.

Aegis Asset Management is also expanding its presence in the Japanese rental housing market through its subsidiary, Aegis Asia. In March 2018, Aegis Asset Management established and has been managing a private fund investing in three rental housing buildings in Tokyo (Otorii, Kameari, and Ryogoku). At the time, Yulchon Law Firm provided legal counsel.

Subsequently, to expand its foothold in the Asian region, Aegis Asset Management completed the establishment of its Japanese subsidiary, Aegis Japan, in early 2023.

In addition, Aegis Asset Management signed a strategic memorandum of understanding (MOU) with SBI Tozai Realty Advisors—the real estate subsidiary of Japanese financial group SBI Group—to jointly invest in and develop the Japanese multifamily (rental housing) market.

Potential for “Project Collaboration” in the Asian Real Estate Market Remains High

Industry observers suggest that the two companies may engage in project-based cross-border cooperation in the global real estate market in the future, such as by establishing joint funds or local joint ventures (JVs).

Previously, Hillhouse had been selected as the preferred bidder for the acquisition of Aegis Asset Management and had proceeded with the transaction by designating Japan’s Samti as the acquiring entity.

The market is paying close attention to Lava Partners’ approach to collaboration. Lava Partners has extensive experience executing investment projects in various Asian countries by establishing joint ventures (JVs) with local asset managers or developers, or through joint general partner (Joint GP) arrangements.

In fact, in Japan, Lava Partners raised a large-scale hospitality fund through a joint GP arrangement with Eastgate Group, a local real estate management firm. The first hotel-specific fund, established in late July of last year, is named the “Eastgate-Samti Hospitality Fund I” and has a size of 58 billion yen (537.3 billion won).

In emerging markets such as India, the firm has also built a track record of investments by forming asset-specific joint ventures (JVs) with major local companies, including Japan’s Mitsubishi Jisho and Hulic.

For example, Rava Partners’ Logicap entered into a long-term joint venture with Mitsubishi Jisho, Japan’s largest real estate developer, and committed in 2024 to jointly develop large-scale logistics and industrial infrastructure assets in the National Capital Region (NCR) of Delhi, India. Logicap Management is a portfolio company of Rava Partners specializing in logistics and digital infrastructure in India.

Japanese developer Hulic formed an asset-level joint venture with Logicap in January by making an equity investment in Logicap’s logistics asset portfolio in the Pune and Chennai regions of India. This marks Hulic’s first investment in Indian industrial real estate.

Given this collaborative model, industry observers believe it is entirely plausible that Lava Partners could participate as a co-GP or strategic JV partner in future overseas projects led by Aegis Asset Management.

It is understood that the reason for the collapse of this deal was not simply a matter of price. According to Aegis Asset Management, the acquisition price of 1.1 trillion won was the figure proposed by Hillhouse, and financing was proceeding in accordance with those terms.

Ultimately, it is reported that Hillhouse decided to halt the transaction after comprehensively reviewing the likelihood of obtaining approval for the change in controlling shareholder. A change in the controlling shareholder of a financial institution requires approval from the Financial Services Commission and is typically considered the final hurdle in closing M&A transactions involving financial institutions.

During the review process, factors such as the suitability of the acquiring entity, the presence of any legal disputes, and the status of any pending criminal cases are comprehensively considered.

An investment banking industry source stated, “In this deal, regulatory uncertainty was a bigger variable than valuation,” adding, “Although the M&A fell through, since the two companies share common interests in the Asian market, project-based cooperation could be pursued again at any time.”