ARA Ups Stake in Japan’s Kenedix to 30% After $1.3B Buyout

Singapore-based ARA Asset Management announced Friday that it had increased its equity stake in Japanese fund manager Kenedix to 30 percent, up from 20.27 percent previously.

ARA had earlier supported the privatisation and buyout of Kenedix by Sumitomo Mitsui Finance and Leasing (SMFL), which maintains a 70 percent stake in the company.

One of Japan’s most prominent real estate fund managers, Kenedix was delisted from the Tokyo Stock Exchange on 17 March this year. ARA first bought into Kenedix in 2017 and was the single largest shareholder pre-buyout.

“Kenedix is led by a best-in-class management team and we see tremendous potential in terms of synergistic growth opportunities for both our businesses,” ARA group CEO Moses Song said in a release.

Privatisation Complete

ARA’s expansion of its stake in the Tokyo-based firm was revealed after the company had successfully teamed up with SMFL, a leasing unit of Japan’s giant Sumitomo Mitsui Banking Corporation, last November to launch a JPY 132 billion buyout of Kenedix.

“We are pleased to have ARA’s support in the successful privatisation of Kenedix,” said SMFL president Masaki Tachibana. “This important milestone marks the start of our long-term strategic partnership, as we work together to mutually support our growth strategies in Asia.”

The buyout offer of JPY 750 per share, amounting to a 15 percent premium, came after Sumitomo Mitsui had earlier invested in funds managed by Kenedix, including Kenedix Office Investment Corp, a REIT in which Sumitomo Mitsui Trust Asset Management holds a nearly 5 percent stake.

Founded in 1995 as Kennedy Wilson Japan, Kenedix had listed on the Tokyo exchange in 2002 after being spun off from its California-based parent firm. The company is now Japan’s largest independent real estate asset management group, with JPY 2.3 trillion ($21 billion) in assets under management as of 31 December 2020.

Kenedix’s diversified funds management business includes three publicly listed REITs and one private REIT, over 50 private real estate funds and a growing crowdfunding business.

ARA said it sees complementary strengths in Kenedix’s established funds management platform. The Singaporean firm views the privatisation as an opportunity to grow Kenedix’s thriving REITs and private funds business, enhance the fund manager’s access to credit and other fundraising, and expand its business into new growth areas.

Physical Territory and Digital Space

During the last 18 months, Kenedix has been actively expanding its Japan portfolio — including partnering with US fund manager Nuveen and Dutch pension fund manager Bouwinvest on a series of Japanese rental apartment acquisitions, with the local Japanese firm acting as asset manager on those deals.

For ARA, the expansion of its stake in Kenedix comes as Asia’s second-largest real estate fund manager continues to grow into more international markets.

With its business in Korea already managing a number of REITs, the Warburg Pincus-backed fund manager has been battling to complete a takeover of Australia’s Cromwell Property Group.

Last month, ARA agreed to acquire a 50 percent stake in Dasin Retail Trust’s trustee-manager and 5 percent of the trust’s units in a deal that would extend its reach into China’s Greater Bay Area, The Asset reported.

Dasin, with assets under management of RMB 11.6 billion ($1.8 billion), has a portfolio of seven retail malls in high-population catchment areas with limited competition in Zhongshan, Zhuhai and Foshan.

In addition to its spread across the world map, ARA is expanding in the digital realm.

This week, ARA-backed fintech firm Minterest Holdings announced that it had agreed to merge with blockchain platform Digiassets Exchange Singapore (SDAX) to build a global digital asset exchange ecosystem. ARA co-founder John Lim will be the chairman of the merged entity, SDAX Financial.