ARA Asset Management moved a step closer to control of Cromwell Property Group, after the Australian property investment firm announced that its chief executive would be stepping down at year-end.
Paul Weightman, who co-founded the A$8 billion ($6 billion) investment management firm in 1998, had been leading an unsuccessful fight against board representation for ARA, which is Cromwell’s largest investor. The Singapore firm had gained board representation in September before Cromwell confirmed Weightman’s upcoming departure late last week.
“On behalf of the Cromwell Board and Cromwell securityholders, I would like to acknowledge his longstanding contribution and thank him for his dedication and hard work over more than two decades,” Cromwell chair Jane Tongs said in announcing Weightman’s planned departure to the Australian stock exchange.
Weightman’s fate had been hinted at earlier this month after investors led by ARA had voted down a slate of directors recommended by Cromwell’s management in an annual shareholders meeting last month. The company is set to vote on a new set of directors before mid-February with Weightman’s departure seen as a way for Cromwell’s remaining management to seek a potential compromise with ARA.
CFO Takes Over
“It’s been an honour and a privilege to have been CEO of a business that has delivered such strong returns over such a long timeframe,” Weightman said. “I would like to thank my fellow directors, past and present, and everyone who has participated in the Cromwell journey over the last 22 years.” Representatives of ARA, which is 48.7 percent owned by US private equity giant Warburg Pincus, declined to comment on Weightman’s departure in response to inquiries from Mingtiandi.
With Weightman stepping down, Cromwell chief financial officer Michael Wilde has been named acting chief executive from 1 January, while the company conducts a search for a permanent replacement, according to the announcement. ARA’s head of Australia, David Blight, who had served on Cromwell’s board before resigning in mid-2019, is believed to be a candidate for the chief executive role.
In taking on the acting position, Wilde is set for a showdown with ARA and its allies among Cromwell’s investors as the company prepares to vote on a new group of directors within the next two months. ARA has built up a 29.8 percent stake in Cromwell over the past few years, with the company believed to also enjoy support from Singapore-based investor Gordon Tang, who controls Neil Bush-chaired developer SingHaiYi and American Pacific International Capital, and owns 16.7 percent of Cromwell.
After two previous attempts, ARA had succeeded in having Australian lawyer Gary Weiss named to Cromwell’s board in September, along with investment banker Joe Gersh.
That representation helped set the stage for the shareholders’ vote on 18 November which saw Cromwell’s incumbent chair, deputy chair, and another director rejected. ARA has been critical of Weightman’s pursuit of European investments and the outgoing chief executive had accused the Singaporeans of pursuing a “takeover by stealth.”
Tongs, who had been a long-time non-executive director at Cromwell before being named chair after the boardroom showdown last month, is facing re-election along with two other directors of the company in the upcoming shareholders vote. ARA-linked directors Weiss and Gersh will not be subject to re-election.
ARA Expands Global Footprint
With just under $83 billion in gross assets under management as of 30 June this year, ARA has been expanding its global footprint since CEO John Lim led a $1.3 billion management buyout of the firm in 2016.
In August of this year, ARA-managed Suntec REIT announced the completion of a project at 477 Collins Street in Sydney after buying a half-stake in the office redevelopment from Australia’s Mirvac for A$414 million in 2017.
Last year Suntec REIT acquired the Allianz Centre in Adelaide for A$148 million and bought up 21 Harris Street in Sydney’s Pyrmont area for A$297 million.
In agreeing to pay $317 million to acquire a 19.5 percent stake in Cromwell in March 2018, ARA’s Lim had portrayed the investment as part of a plan to expand into key markets overseas.
“Asia Pacific remains a focus for ARA even as the company expands its footprint globally,” Lim said in a statement at the time. “We entered Australia in 2015 and have been steadily increasing our investments in the market over the last three years.”
Just last month the firm unveiled a $1.3 billion joint bid with Sumitomo Mitsui Finance and Leasing Co to buy out Tokyo-based fund manager Kenedix, which would provide it with a local base of operations in Japan.
The Singaporean company also established itself in Europe last year through a joint venture with London-based Dunedin Property Asset Management to set up ARA Dunedin Ltd, with the goal of managing and investing in real estate assets in the United Kingdom.