CapitaLand becomes Asia’s largest real estate manager with $8.1bn acquisition

CapitaLand’s acquisition of Singaporean property group Ascendas-Singbridge from state investor Temasek has vaulted the firm into the $85bn AUM club.

Singaporean conglomerate CapitaLand’s S$11 billion ($8.1 billion; 7 billion) agreed purchase of Ascendas-Singbridge has catapulted the firm into becoming Asia’s largest real estate manager.

The post-acquisition combined assets under management of more than S$116 billion will put CapitaLand into the same AUM league as that of global asset management firms AEW and AXA Investment Managers – Real Assets among others, according to PERE data.

Under the terms of the agreement, announced by the firms today, CapitaLand will effectively pay the Singaporean state investor Temasek S$6 billion for Ascendas-Singbridge. Half of this will be in cash and the rest in new CapitaLand shares, priced at S$3.5 per share. The deal is subject to regulatory conditions and shareholders’ approval.

Lee Chee Koon, president and group chief executive officer of CapitaLand, told analysts in a post-announcement briefing that the discussion for the acquisition went on for about six months.

“A deal of this size takes time to cook. Even under Ming Yan’s [former President and Group CEO] leadership, [we were] looking at options of how to strategically reposition the company for the future. We looked at many organic and inorganic options and this was one being reviewed,” he said.

According to Andrew Lim, the firm’s group chief financial officer, both Ascendas-Singbridge and CapitaLand have been on a “high single/double digit trajectory in ROE terms” and by dovetailing the two, the firm would be able to maintain the same ROE trajectory going forward.

With this acquisition, CapitaLand will significantly expand its Asia-Pacific exposure across markets and asset classes. The fund management platform, with S$67 billion in assets under management, will be one of CapitaLand’s key pillars of growth under what Koon described as ‘CapitaLand 3.0’.

As one Asia-focused investment manager told PERE, both firms have different investment expertise – CapitaLand has more retail and residential assets under management while Ascendas-Singbridge’s key focus has been in so-called business spaces – and that makes the combined entity even more influential.

Indeed, over 80 percent of Ascendas-Singbridge’s S$23.6 billion AUM is in business spaces, of which half or around S$12.4 billion is invested in logistics, business parks and data centres, according to an official statement.

India is the new market added to CapitaLand’s geographic mix and will make up 3 percent of its total AUM. Ascendas-Singbridge has a S$2.6 billion AUM exposure in Indian business spaces. Last June, the firm also entered the logistics sector with an approximately S$400 million joint venture partnership with Temasek.

Meanwhile, CapitaLand’s AUM in one of its core markets, Singapore, will increase from 30 percent to 33 percent of its total portfolio. This totals S$38.6 billion, including Ascendas-Singbridge’s existing portfolio of logistics and business parks in the city-state. On the other hand, its AUM exposure in China is set to decrease from 48 percent to 41 percent, totalling S$48.2 billion.

This acquisition is the third major M&A deal involving a Singapore-headquartered real estate firm in the past two years, propelling the firms onto the global stage. Following its privatisation in July 2017, logistics specialist GLP now has $60 billion in assets under management across real estate and private equity, according to its website. ARA Asset Management, which was acquired by a consortium of investors led by Warburg Pincus in 2017, is currently understood to be managing S$80 billion in gross assets under management, with ambitions of reaching S$100 billion within the next five years.