Goodman Group and the Canada Pension Plan Investment Board (CPPIB) announced the establishment of a new fund worth $400 million.

The Goodman Australian Development Fund (GADF) will have an initial equity investment of $250 million, with a target gross asset value of approximately $400 million. It will be established and seeded with the acquisition of Goodman's Kmart development in Melbourne for a total consideration of $66.3 million

CPPIB will hold a majority 80 per cent stake in the fund.

Goodman Group CEO Greg Goodman said the fund will focus on acquiring a range of high quality development opportunities in Australia and secures a funding platform for the company's Australian development business over the next two years.

"This is our second fund with CPPIB following the successful China fund announced last August and we are delighted to be building on this important partnership. Today's announcement demonstrates the strength of our relationships with global investor groups such as CPPIB and our ongoing ability to attract third party capital," said Goodman.

In August, CPPIB formed a $200m joint venture fund with Goodman Group to invest in China.

Goodman said the GADF is the first on a number of initiatives flagged in the company's half year results for 2010 and is consistent with its strategy of matching new third party capital with the group's $10 billion development pipeline.