Swedish investment firm East Capital has launched a new property fund, focusing on holding retail assets such as shopping centres in Russia as well as the Ukraine and Kazakhstan.

The East Capital Russian Property Fund is a closed-end fund targeting qualified investors and managed by East Capital Private Equity, which is headquartered in Stockholm. The initial target fund size is €200 million ($314.5 million). The fund’s investment strategy is to invest in cash-generating shopping centres and other types of retail real estate that is expected to gain from the strong domestic demand and continued growth in the retail market.

The fund’s geographical focus is fast-growing regional cities with more than 500,000 inhabitants, primarily in Russia. The fund’s financial target is to achieve an unleveraged internal rate of return of more than 15 per cent. The fund is expected to be able to start its investment activities already during the summer of 2008.

The fund has a seven-year term with possible continuation of up to three one-year periods. Investors have the possibility to either invest directly in the fund or through an investment vehicle. Direct investors must commit a minimum of €1 million to the fund, while the minimum investment in the investment vehicle is €50,000. Carnegie Investment Bank will coordinate buy and sell interests in the investment vehicle shares by facilitating over-the-counter market activities.