Oct. 21 (Bloomberg) -- Moss Capital, formed by ex-Macquarie Group Ltd. and Lehman Brothers Holdings Inc. bankers, is close to completing a A$160 million ($148 million) fund that will invest in Australian property.

The Sydney-based funds management and advisory firm, which started in August, may finish raising capital in two months for another three real-estate funds, Chief Executive Officer Glenn Willis said. He declined to specify the funds’ targeted sizes.

“Across Australia, the demographics are favorable, the supply and demand fundamentals are favorable,” said Willis, the former head of Lehman in Australia. “Put all that together and there’s a real opportunity. We’re seeing a lot of high-quality development opportunities come across our desk.”

Willis and Moss Capital Chairman Bill Moss, the ex-head of banking and property at Macquarie, are seeking to raise money locally and overseas as the domestic economy rebounds, stocks surge, and the Australian dollar rallies to a 14-month high.

Those factors are boosting prospects for locally listed property trusts, said AMP Capital Brookfield, a A$6 billion partnership between AMP Capital Investors of Sydney and Toronto’s Brookfield Investment Management formed this month to invest in globally listed property trusts.

Moss Capital has already finished raising capital for a so- called special opportunities fund, and bet the money on an unlisted convertible bond in the property industry, Willis, 48, said at his offices on Oct. 19. He declined to identify the investment or its size. The firm is also completing a fund of less than A$20 million to invest in natural resources, he said.

Domestic Recovery

Willis co-founded Grange Securities in 1995, and became Lehman’s Australian managing director after the now-failed Wall Street firm took over Grange in 2007. Moss started Sydney-based Macquarie’s property unit in 1984 and helped increase investments to over A$25 billion. The pair’s firm has about 15 employees, Willis said.

The outlook for property has changed in the three months since Moss Capital set out to advise on debt and equity financing, and create new investment pools, Willis said.

“We expected to see a marketplace where there’d be a lot more distressed asset opportunities coming out of the real- estate sector,” said Willis. “As it has unfolded, the levels of distressed assets have been fewer.”

Australia’s economy expanded more than analysts expected in the first half, the nation’s four-biggest lenders have stayed profitable, and the central bank this month became the first among G-20 nations to start raising interest rates since the height of the financial crisis. The benchmark S&P/ASX 200 index has jumped 54 percent from a March low.

‘Ever-Growing Font’

Moss Capital’s funds will typically invest over three to four years, with money coming from private individuals and fund managers, Willis said. Moss is also eying the nation’s obligatory pension savings scheme.

“We see the broader superannuation sector in Australia as an ever-growing font of capital,” Willis said.

Australian pension funds, unit trusts, life insurers and managed funds rose 4 percent to A$1.21 trillion in the second quarter from three months earlier, according to the Australian Bureau of Statistics.

To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

Last Updated: October 20, 2009 20:18 EDT