SINGAPORE, Oct 28 — Singapore conglomerate Straits Trading Company Ltd is buying just over a fifth of real estate fund manager ARA Asset Management Ltd in a S$294.4 million (RM746.4 million) deal it said would boost its property business.
Straits Trading will acquire the 20.1 per cent stake in ARA from Cheung Kong Investment Company, a unit of Hong Kong tycoon Li Ka-Shing’s Cheung Kong Holdings Ltd, and ARA Chief Executive John Lim.
Lim and Straits Trading also committed S$950 million to set up a new joint property investment firm, the companies said in a statement.
“In order for us to compete with global players, we need strong financial support,” Lim told Reuters after the deal was announced. ARA manages REITs with assets in Hong Kong, Singapore, Malaysia and mainland China.
Straits Trading said the deal will enable it to unlock value from its property business, which contributed 5 per cent to its 2012 revenue.
Analysts the transaction could help both companies monetise their real estate portfolios.
“For Straits Trading, they might want to leverage on ARA’s strength to manage their properties. They have the option to spin off some the assets into a REIT or a business trust in future,” said Ng Kian Teck, deputy head of Singapore-based brokerage Voyage Research.
ARA has doubled the assets it manages from 2008 to a record high S$23.5 billion as of June 30. The company is among the top performing mid-cap stocks on the Singapore stock exchange so far this year, Thomson Reuters StarMine data shows.
After the transaction, Cheung Kong will own 7.84 per cent of ARA, and Lim will hold 19.25 per cent. — Reuters
