Alibaba-Led Singapore Project Gets New Partner as Gordon Tang Leads Buy of 21% Stake

Mainland tech giant Alibaba is getting some new partners in a S$1.68 billion ($1.24 billion) office project in Singapore’s Tanjong Pagar area with companies controlled by mysterious Chinese investor Gordon Tang buying a 21 percent stake in the venture from a group led by Perennial Holdings boss Kuok Khoon Hong.

Chip Eng Seng Corp, together with a joint venture between SingHaiyi Group and Haiyi Holdings, all three of which are controlled by Tang and his wife Celine, is acquiring the one-fifth interest in the AXA Tower office project at 8 Shenton Way at a value of S$353 million, based on the estimated S$1.68 billion value of the existing asset, according to a Perennial statement early Tuesday.

The deal puts the Tang-controlled entities into a partnership with Alibaba, which holds a 50 percent stake in the project, as well as with Perennial and SGX-listed agribusiness giant Wilmar International, both of which are chaired by Kuok Khoon Hong and with the Singaporean tycoon himself, which together hold a 29 percent share, in developing a new 144,162 square metre (1.55 million square foot) mixed-use project along a strip which has become a focus for global property investors.

Just last week Mingtiandi reported that AEW had sold the 20 Anson office tower, which is located across the street from the AXA Tower, to KKR for S$599 million. That deal was uncovered just days after a CapitaLand joint venture announced that it is selling 79 Robinson Road – an office tower two minutes’ walk to the north – for S$1.26 billion.

Buying into a Landmark

“The proposed acquisition presents an opportunity for the company to acquire a meaningful stake in a prime real estate site located within the central business district,” Chip Eng Seng said in its own filing to the exchange. “Furthermore, the company is able to participate in a large-scale redevelopment project which, when completed, is expected to be an iconic landmark within the central business district.”

The Tang group are buying into the project through a pair of separate transactions, with CEL, a unit of Chip Eng Seng, purchasing a 21 percent stake in an entity which holds a half-share in the property also known as 8 Shenton Way for a cash consideration of S$2.13 million, while also agreeing to invest up to S$251 million in the redevelopment project and take over a proportionate slice of loans associated with the asset.

In a parallel transaction, a joint venture of SingHaiyi, which Tang privatised last year, and the tycoon’s Haiyi Holdings, also entered into a share and purchase agreement with the sellers to acquire a 21 percent stake in the same entity holding a 50 percent stake in the project for an undisclosed amount. Similar to Chip Eng Seng, the JV will also take over a portion of the loans of the existing owners and commit to contributing a proportionate share of capital for the redevelopment project.

Among the investors selling their stakes in the venture is a unit of Singapore Press Holdings, which is currently in the process of being acquired by Temasek-led Cuscaden Peak. In 2015, SPH had paid S$19.3 million for a 5.3 percent stake in the AXA Tower which it topped up with another S$5.9 million investment in 2020 to add another one percent interest in the redevelopment project.

Also selling out are a unit of local retailer Bread Talk, Kuala Lumpur-based property developer Huatland Development and a private entity named Shenton Circle, according to Perennial’s announcement.

New Project Partnership

The deal sets up a new partnership for a redevelopment project in Singapore’s downtown core teaming up Alibaba with Gordon Tang’s rapidly expanding real estate kingdom in the Lion City and the family of Malaysian billionaire Robert Kuok, which holds the largest stake in Wilmar. Kuok Khoon Hong himself is a nephew of the Shangri-La Hotel founder and cousin of Kerry Properties boss Kuok Khoon Hua.

Preliminary redevelopment work on the redevelopment of the AXA Tower, which Alibaba invested in during 2020, has already commenced as the owners prepare to convert the site into a new project incorporating office, retail, hotel and residential components.

Once completed in 2028, Perennial will provide property management and asset management services for the property, which will be 48 percent larger than the existing AXA Tower. The new owners are also applying for a fresh 99-year leasehold for the site to extend the 60 years remaining on its land tenure.

Completion of the transaction is expected by the end of this month.

Tang Empire Expands

The announcement by Gordon Tang’s group adds to a string of development projects which the prolific investor has built up over the last year.

In December, the same trio of entities, Chip Eng Seng, SingHaiyi and Haiyi Group teamed up to purchase the Peace Mansion mixed-use project in District 9 for S$650 million, with plans to redevelop that aging complex.

In the middle of last year, Tang’s SingHaiyi and Chip Eng Seng, alongside Hong Kong partner Chuan Holdings, won the Maxwell House site in Singapore’s Tanjong Pagar area for S$276.8 million, where the JV plans to build a 13-storey commercial development.

Tanjong Pagar Deal Storm

The investment in the AXA Tower project comes as Singapore’s investment market starts out 2022 in high gear.

So far this year, investors have acquired $6 billion in commercial real estate assets in the city, according to Mingtiandi research, which is equivalent to 80 percent of the $9 billion recorded in all of 2021.

In addition to the 20 Anson and 79 Robinson Road deals, representatives of the owners of the International Plaza, which is located just opposite the AXA Tower, announced on Monday that the strata title commercial project is now back on the market at a reserve price of S$2.7 billion.

Note: This story has been updated to show that one of the sources was a notice by Perennial Holdings. This statement was issued on the company’s website and not to the stock exchange. Mingtiandi regrets the error. This version also clarifies that the S$353 million value of the investment is based on the total asset value provided by Perennial.