Listed Australian real estate manager Dexus Funds Management has significantly boosted its funds management platform with the acquisition of the real estate and domestic infrastructure business of Collimate Capital, the private funds management arm of AMP Limited, formerly known as AMP Capital.
The two parties finally entered into a share sale and purchase agreement on Monday after taking more than a year to proceed. The transaction, originally announced in April 2022, had stalled due to a delay in Chinese regulatory approval relating to the transfer of AMP’s ownership in China Life AMP Asset Management out of entities that Dexus has agreed to purchase.
Under a revised structure, the transaction which will now close in two stages. The first completion on March 24 will allow the Collimate Capital business to be integrated into the Dexus platform, while the final completion will be dependent on the transfer of the ownership interest in China Life AMP Asset Management out of entities being acquired by Dexus. Dexus will pay a base purchase price of A$225 million ($151 million; €139 million) and an addition of A$50 million upon the final completion.
The acquisition will deliver A$8 billion in real estate funds under management as well as A$10.2 billion in infrastructure funds under management to Dexus, which had A$26.3 billion in existing real estate funds under management. Notably, the deal will boost Dexus’s retail capability; Collimate’s real estate portfolio is understood to have a significant exposure to the retail sector, including the AMP Capital Shopping Centre Fund which has over A$2.7 billion of AUM.
“Our funds management platform has significant exposure and experience in office, industrial and healthcare. The addition of the pooled retail fund ASCF gives us the opportunity to introduce some new capabilities to our funds management team, particularly in that retail management and retail development space, both of which are strengths of the AMP Collimate platform,” said Deborah Coakley, executive general manager, funds management at Dexus. The firm’s real estate equity funds include two open-end vehicles: Dexus Healthcare Property Fund and Dexus Wholesale Property Fund as well as other vehicles and mandates.
Despite the headwinds in the retail sector, Coakley said ASCF is supported by domestic and international investors that see Australian retail as an attractive investment option. Retail spending in Australia throughout 2022 outperformed market expectations, according to a JLL report. Consumers spent a total of $A36 billion per month, compared with A$28 billion a month pre-pandemic.
ASCF manages “some of Australia’s best retail assets” and has a strong investor following, said Coakley. She believed the fund will further benefit from employees returning to the office and supporting retail in the main central business districts in Australia.
At the platform level, the transaction will bring 450 experts from Collimate to Dexus which provides further diversification in expertise by geography, tenant and sectors. The addition of the infrastructure platform will also give Dexus exposure and expertise in airports, aged care, student accommodation, power, utilities and renewable energy.
As more investors are looking for fewer and deeper relationships with managers, the addition of Collimate’s business will help Dexus to broaden its product offerings in real assets to investors, according to Coakley. “We believe that this merger certainly puts Dexus at the top of the picking order when it comes to being the one-stop shop for investors,” she added.