Industrial developer ProLogis is to launch a $5bn (£2.4bn) European private equity fund.

The fund, which will be launched before the end of the year, will seek to raise equity against $5bn (£2.4bn) worth of assets owned or under development by ProLogis’s European arm, ProLogis European Properties, during the next four to five years.

PEP would own a 30% stake in the fund, the US parent company would own a 20% stake, and further equity would be raised from private institutions such as pension funds.

‘There are a lot of institutional investors who want to have a stake in large industrial schemes,’ Robert Watson, chief executive of PEP, said. ‘This will give them access to $5bn of stable product.’

Watson was speaking as PEP announced an 11.1% increase in earnings adjusted to exclude one-off gains or losses to €81.6m (£54.5m) for the first half of 2007, compared to the same period last year.

The company is listed on the Euronext exchange, and net asset value rose 3.2% to €14.41(£9.64) a share compared to the first half of 2006.

The value of company’s portfolio increased by 7%, to €4.5bn (£3bn), driven by €220m (£147.16m) of acquisitions and €50m (£33.45m) revaluation gain.

Watson said that he thought earnings would continue to grow at a similar level, but would be driven by rental growth rather than yield compression from now on.

‘Construction and land costs have been increasing over the last few years, but increasing capital rates have masked this. We will now see rents increasing in many markets and this will drive growth.’