RREEF looking to Asia, infrastructure for growth

By Simon Challis

LONDON (Reuters) - Deutsche Bank's (DBKGn.DE: Quote, Profile, Research, Stock Buzz) alternative investments arm, RREEF, is looking to rapidly expand its investments in Asia and infrastructure but sees some dangers in the white-hot markets of India and China.

"The marketplace is challenging for sure but it is also fairly opportunistic. We are still focusing on some of the emerging markets around the world," Chuck Leitner, global head of RREEF, told the Reuters Global Real Estate Summit on Wednesday.

The firm, which had over 55 billion euros ($85.68 billion) in assets under management in March, is making a big push into both Asia and infrastructure, Leitner said.

He said he regarded investment infrastructure as a "mega-market" in the coming years.

"The privatization of infrastructure is something we continue to see happening consistently over the long term. We see a lot of investor interest in participating in that process," he said.

Leitner said infrastructure investments accounted for around 10 percent of RREEF's assets under management, up from "nearly nothing" three years ago, mirroring the allocation made to this sector by institutional clients, many of whom were now setting aside money specifically to invest in infrastructure projects.

Such investments not only offered good portfolio diversification but also offered protection against inflation, said Leitner.

But he saw the potential for its infrastructure investments -- which already include a toll road in Austria, ports in the UK, United States and Canada and car parks in Europe -- to expand swiftly in the future.

"It is an asset class that can grow very rapidly because the assets themselves are very large, so you can really accelerate your exposure pretty quickly by investing in some very significant assets," Leitner said. "So I see it potentially being upwards of 25, 30 percent of our overall assets under management as we look out over a few years."

ASIA PUSH

RREEF was also looking to rapidly grow its investments in Asia, where it already has operations in China, South Korea, Japan and Australia, said Leitner.

Asia accounts for only about 10 percent of its assets under management at the moment, but Leitner said he expected that to grow to about a third of its overall business in the long-term.

"I think if you look at the very big picture in terms of how the world sets up from a wealth point of view, Asia eventually needs to be a third of your model in terms of assets under management."

Leitner said he was enthusiastic about growth opportunities -- both for infrastructure and real estate investments -- in India, where RREEF has begun to invest in the past 12 months.

But he also sounded a note of caution on both the Indian and Chinese markets.  Continued...