John Lim, Warburg Pincus Said Planning Buy Out of ARA Asset Management

The region’s real estate investors are bracing for news of the latest $1 billion deal as reports spread of ARA Asset Management CEO John Lim leading a buyout of the Singapore-listed firm.

ARA, which counts Hong Kong tycoon Li Ka-shing among its largest investors, halted trading of its shares on the Singapore exchange late Thursday pending an announcement.

That bulletin is expected to provide details of a plan by Lim, who co-founded the firm in 2002 and took it public in 2007, to buy out the company’s listed shares, with help from major shareholders and US private equity giant Warburg Pincus. News of the planned buyout was first reported by the Wall Street Journal, which cited sources familiar with the matter.

ARA’s request to halt trading came after the Singapore exchange asked for an explanation of a sudden spike in transactions of the company’s stock on Thursday. The investment manager had a market capitalisation of S$1.4 billion ($1 billion) when trading was stopped.

Lim Shoots for $36 Bil Under Management

ARA, which manages eight real estate investment trusts (REITs) and numerous funds, currently has more than S$29 billion ($21 billion), under management with plans to grow that base to S$50 billion ($36 billion) according to a report this May in Bloomberg. The company’s stock, which closed at S$1.50 per share on Thursday had slid from a mid-2015 high of S$1.82 per share, however.

The buyout could be a way for Lim to realise his vision of a bulked-up ARA, and he should have enough firepower among his larger investors to make a buyout happen.

The Journal report said that Lim, who still holds 19 percent of ARA, will be joined by other existing shareholders who, with the co-founder, hold 47 percent of the company’s outstanding shares. Singapore’s Straits Trading is the single largest ARA shareholder at 20.1 percent, with Franklin Resources holding another 11 percent and Matthews International Capital Management having just under a 10 percent holding. Li Ka-shing’s Cheung Kong Property Holdings has a 7.8 percent stake.

Acquisition Kings on the Hunt in 2016

Both ARA and Warburg Pincus have been among the region’s more active M&A players this year, with ARA having recently led the $2.96 billion buyout of Cheung Kong Properties’ Century Link complex in Shanghai by China Life last month. In September, the investment manager was said to have won its bid to purchase a 50 percent stake in Singapore’s Capital Square from Alpha Investment Partners, for around $300 million, after missing out on an attempt at buying the Asia Square 1 building in Singapore earlier in the year.

The asset manager’s Prosperity REIT also mysteriously clanked off the rim a HK$1.9 billion attempt to acquire an office building in Kowloon last month, when the planned deal was rejected by the REIT’s board.

Warburg Pincus has also been busy in 2016, engineering the merger of its e-Shang logistics platform with rival player the Redwood Group in January in hopes for what could be a multi-billion dollar Asia real estate IPO. The US-based player then followed up in February by joining with e-Shang co-founder Sun Dongping to commit $220 million to industrial developer D&J China. Now majority-owned by Warburg Pincus, D&J then paid an undisclosed sum in April to acquire a 40 percent stake in Shanghai-based Kailong Investment.