U.S. private equity firm Ares Management has raised more than $300M (£238M) for a new fund targeting value-add European real estate, and it has its eyes set on London.

The Los Angeles-based firm received its first commitments for the Ares European Property Enhancement Partners IV fund, IPE Real Assets reported. The state pension funds of New Mexico and Illinois made the investments, it said.

The fund has an equity target of $2B (£1.6B) and will look to buy 15 to 20 assets that allow Ares to invest and improve their value. It is targeting returns of 10% to 12%, including the impact of debt.

If Ares reaches its equity target, it would exceed the $1.5B it raised for the fund’s predecessor in 2021.

While it did not specify which funds it was buying for, Ares has completed two deals in London totalling more than £100M since the turn of the year.

Ares will acquire the majority of REIT Shaftesbury Capital’s holdings in the Fitzrovia area for £65M. Those properties include some put up for sale last summer as part of that company’s capital recycling programme.

Included in the deal are 11 office properties, seven stores, 28 hospitality and leisure outlets, and 56 residential apartments. The assets were part of a £250M portfolio sale that was ultimately abandoned.

Ares agreed last week to buy 25 Charterhouse Square, a 45K SF office in the Farringdon area of London, for £43.5M from listed company Helical. The deal is at a 6.5% discount to September book value, and the building is almost fully let.