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CHICAGO-Privately held Equity International, an affiliate of Sam Zell’s Equity Group Investments, LLC, is closing its second international investment fund known as EI Fund II. Supported by university endowments, pension plans, insurance companies, family foundations and private investors, the fund totals $300 million in committed capital.

Chris Fiegen, chief financial officer for Equity International, tells GlobeSt.com that the firm was formed in 1999 with the sole intention of acquiring, managing and growing international real estate companies. Focused on “high-utility real estate,” Equity is “building operating companies that are related to the emerging and growing middle class outside of the US and its demand for real estate,” Fiegen says.

Thus far, the company has invested $400 million in eight companies, developing its presence in Mexico and Brazil. Included in the first fund was the acquisition of Homex, a Mexican homebuilder. After a self-described successful IPO in 2004 and a secondary offering this year, company execs say it is worth 12 times the initial investment.

Fiegen stresses that the second fund is a direct continuation of the first. Made in June 2005, the initial investment was in Gafisa, a Brazilian homebuilder. Equity launched the company’s IPO in February. “This investment is already valued at more than five times the multiple on invested capital as a result of the recent public offering,” execs said in a statement released yesterday.

Unlike other funds which can generate billions of dollars, Equity deliberately raises a small amount in each fund. According to the company’s CFO, this allows company execs to take the necessary time to evaluate, select and directly manage the companies they work with.

“The nature of our business is slow in a lot of ways,” Fiegen tells GlobeSt.com. “There are no shortcuts; the evaluation can take years. Fund I illuminated that this model does work, and Fund II insures we have proper capitalization.”

Fiegen says Equity is anticipating a series of funds in the future, provided there is enough work to sustain the company. Success, he says, comes with locating geographic areas with signs of stability and investment-grade real estate within reach. By identifying trends early on, he continues, Equity is poised for higher returns.

“What we saw in Mexico is repeating itself on a macro-economic level,” Fiegen says. “By taking that model, we can build caravan parks in the UK, affordable housing in China, or corporate real estate in Brazil. These themes are going to repeat themselves. It has to be scalable and ultimately liquid. Our involvement can impact those two important variables, and the access to capital can enable it.”

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