CapitaLand Shareholders Set to Vote on $15.9B Restructuring on 10 August

CapitaLand’s $15.9 billion plan to privatise its development operation and spin off its fund management business is set to go to shareholders next month after receiving approval from the board of Southeast Asia’s largest real estate business.

“This restructuring is a logical next step to accelerate the growth of CapitaLand’s businesses and drive greater shareholder value,” said CapitaLand group CEO Lee Chee Koon, who is also pegged to helm the restructured entity should the scheme win approval from shareholders.

The company will hold an extraordinary general meeting and a scheme meeting, both electronically, on 10 August to seek shareholder approval for the plan, which was announced in March.

The listing will make CapitaLand Investment (CLI) the largest listed real estate investment manager in Asia and the third largest globally, CapitaLand said in a press release issued Saturday.

Temasek in Control

Should the Temasek Holdings-controlled titan win approval from its investors, the delisting of CapitaLand shares and the listing by introduction of CLI shares on the Singapore Exchange is expected on or around 17 September.

CapitaLand will own a 51.76 percent interest in CLI upon its listing. The privatised development business — to continue under the CapitaLand name — will be entirely held by CLA Real Estate Holdings, a company that currently owns 52 percent of CapitaLand and is in turn wholly owned by Singapore’s primary state holding firm.

CLI boasts real estate assets under management of S$115 billion ($84.6 billion) and real estate funds under management of S$78 billion held through the firm’s listed and unlisted funds across Asia Pacific, Europe and the US.

CLI’s business model comprises two key segments: a fee income business anchored by investment and asset management, property management and lodging management; and real estate investments held directly and through CLI’s stakes in listed and unlisted funds.

CapitaLand’s investment management arm has seen steady growth in fee income business, which in 2020 accounted for 40 percent of CLI’s S$2 billion in revenue and 21 percent of its S$1.3 billion in earnings before interest, tax, depreciation and amortisation, with real estate investments contributing the rest.

Giant Evolution

Under the terms of the restructuring, CapitaLand shareholders will receive the equivalent of S$4.1 per share in cash and scrip, including one share of CLI for each share in the existing company, valuing Southeast Asia’s largest developer at about $15.9 billion.

CapitaLand in February reported its first full-year loss in almost two decades, citing revaluation losses and impairments tied to the COVID-19 pandemic. Once the new structure is in place, the group will focus on strategic growth through its capital-efficient, fee-generating investment management unit, as opposed to the capital-intensive, slower-moving development business.

The Singaporean giant is undergoing an American-style evolution, from a property developer with an investment management arm to an investment manager with a legacy development component. Last month the group announced its registration as a fund manager in China, a market that already accounts for 37 percent of CLI’s real estate assets under management.

Only last year did CapitaLand relinquish its crown as the biggest fund manager in Asia Pacific real estate by assets under management to fellow Singaporean firm ARA Asset Management, which had $66.9 billion in APAC to CapitaLand’s $62.9 billion.

The good news for CapitaLand was that it cracked the global top 10 for the first time, with its real estate assets under management worldwide exceeding $100 billion, according to the results of the Fund Manager Survey 2021.