Keppel Capital Holdings has raised over half of its target commitments for its US$500 million ($679.7 million) Keppel Education Asset Fund through its wholly-owned subsidiary Keppel Capital Alternative Asset.

The fund, which is managed by Keppel Capital Alternative Asset, is a closed-end private equity fund that will focus on the fast-growing private education sector in Asia Pacific. The investors in the fund and its parallel vehicle include a sovereign wealth fund, an endowment fund and a family office.

The fund intends to partner established school operators to invest in private education-related real estate in the Asia Pacific region and build a portfolio of stable assets in different education sub-sectors.

“When fully leveraged and invested, the Fund is expected to have assets under management of approximately US$1.2 billion,” says Keppel Capital Holdings.

On September 22, the fund has acquired a 70% stake in a premium bilingual K12 school property operated by Malvern College Chengdu, located in Chengdu, Sichuan Province, China.

The fund is also looking at other education-related assets in Australia, China, Singapore, South Korea, and Vietnam.

“The private education industry is a resilient and fast-growing sector in Asia Pacific, supported by macrotrends including rapid urbanisation, an expanding middle class and rising affluence, increasing focus on education as well as supportive government policies,” says Christina Tan, CEO of Keppel Capital.

“Education assets offer investors attractive risk-adjusted returns, with potential downside risks protected by established tenants and long leases. The reception to the Fund despite the pandemic reflects investors’ confidence in and demand for this defensive asset class, as well as Keppel’s capabilities,” Tan adds.

Jacqueline So, co-founder and CEO of Malvern College (Asia), says, “The partnership will support our overseas expansion plans and we can focus on strengthening our operations to provide superior education and services to our students”.

Shares in Keppel Corporation closed 7 cents lower, or 1.7% down, at $4.12 on September 21.