Viewing the mega-merger from Asia

The merger of Richard Ellis and ING Real Estate Investment Management, expected to complete in the second half of this year, will create a heavyweight group with almost $100 billion of assets under management. According to Richard Price, the chief executive officer for Asia at ING REIM, the Asia component of that will amount to about $5.5 billion. PERE recently caught up with Price to hear how the transaction is going:

PERE: What will the CBRE Investors Asia platform look like when the merger completes?
RP:  Their existing business on the direct side, for which I’m going to responsible, currently is relatively small. They have a little bit under $400 million of assets under management in the region. Bringing the two platforms together, we’re a little shy of $5.5 billion assets under management. Accordingly, their team is relatively small in comparison to us. They’ve been working from offices in Hong Kong, Shanghai and Tokyo but we’ll not be opening new offices. All in, we’ll be approximately 130 staff.

PERE: In terms of integration then, I suppose you will have an easier time of it than, say, your counterparts in Europe?
RP: Yes, I think that’s a fair statement. Anyway, at this stage we’re only planning towards the integration. The integration itself only starts when the actual transaction closes. It is important to emphasise that from a regulatory point of view the two businesses will continue to operate entirely independently until completion. There’s work that can be done, lets say behind the scenes but anything done in terms of plans for new

I also want to add that, everything [CBRE] has committed to me, whether in writing or verbally, they’ve stood behind and that’s a great way to start Richard Price, ING REIM

business, we need to be totally independent. One of the things which have been extremely helpful for us is that CBRE, at the parent company level, has a fairly significant track record of acquiring businesses and bringing them together. They actually have a dedicated project team that has well-established technology for helping do all the planning and ensuring everything from the macro to the super micro is covered. That’s been hugely helpful to us on the commercial side because it means we have people whose experience we can draw on to make sure we don’t miss things as mundane as ensuring printing business cards and making sure emails work on day one. These nuts and bolts things are obviously important but frankly we'd be out of our depth if we had to do them ourselves!

PERE: Are there any interesting cultural nuances between CBRE and ING that you have already noticed?
RP: It’s too early to say as we are running separate businesses at the moment but I would say the interaction that I’ve had so far with my counterparts on the proposed global executive committee has been very positive. Everyone comes across as being very open, accessible and transparent. Obviously, two of the guys I know very well because we have worked together at the global level at ING for a number of years. From that point of view, it’s not a completely unknown group around the table. But without exception there’s a shared sense of enthusiasm and excitement to be in something new and potentially very powerful. I’m extremely encouraged with what I’ve seen from Brett White down through everyone I’ve met through the whole process. I also want to add that, everything [CBRE] has committed to me, whether in writing or verbally, they’ve stood behind and that’s a great way to start.

PERE: Do you foresee, however, different sorts of procedures you’ll have to undertake, perhaps when fundraising or deploying capital?
RP: I hope we raise more capital in the next two years that we’ve done in the last two. I would hope that on that front, the effort is more productive. It’s been a tough last couple of years in general and particularly tough for us given our somewhat invidious corporate position. I think it’s fair to say that we’d all recognise there were things we could have done better and there’ll be some incremental changes that will benefit the ways in which we raise capital and the way in which we make investments. In terms of the specifics of the investment process, the intention is to continue to run a regional investment committee as opposed to one big global investment committee which I think is the right way of doing things. Our clients have consistently told us they want to make sure that the people close to the investments are the ones really driving the decision making process and not people in Eindhoven, The Hague, New York or wherever else.

PERE: Who will sit on CBREI’s Asia committee?
RP: I can’t tell you who will sit on it as it would be considered ‘gun jumping’.

PERE: Fair enough. Moving on to strategy matters. Has CBRE Investors had much input in terms of where they want you to focus your investment strategies or do you have complete autonomy?
RP: We don’t have complete autonomy. They’ll have a view and the pen for the cheque-book when it comes to co-investment capital and so o. But as part of the acquisition process, we put together a very detailed business plan in terms of what we saw was the opportunity and the strategies where we felt there was investment opportunity as well as capital demand. The intention is to go ahead and prosecute on that business plan. The message to us has been ‘as soon as we’re closed, you guys should get to the races quickly’. The pressure is on us to deliver on the potential we think is in the business. The acquisition of ING REM is not one designed to ring our synergies. For them, there was an opportunity to make a step-change in scale in this part of the world. That’s important and now we have an opportunity to improve our business model without the impediments of the last few years.

To learn more about ING REIM’s Asia platform post-merger with CBRE Investors catch the forthcoming June issue of PERE magazine.