Morgan Stanley Private Equity Asia has agreed to purchase a 59.8 percent equity stake in a Singapore-listed company that holds the master franchise for real estate agency ERA in the region for S$129.5 million ($94.4 million).
A buyout fund managed by the unit of the US investment bank will acquire its stake in APAC Realty from Asia Pacific Realty Holdings, an entity controlled by Singapore-based private equity firm Northstar, according to a Monday stock filing. By crossing the 30 percent shareholding threshold, MSPEA’s acquisition will trigger a mandatory takeover offer for all the outstanding shares of APAC Realty.
APAC Realty holds master franchise rights to the ERA brand in 17 Asia Pacific countries, with more than 20,000 agents across 653 offices in the region, including over 8,300 salespeople in Singapore alone.
“We are delighted to invest in APAC Realty and look forward to working closely with its highly regarded professional management team to support the company as it continues on its trajectory as a leading real estate brokerage business in Asia,” said Andrew Hawkyard, co-chief investment officer of MSPEA.
MSPEA’s agreed purchase price for APAC Realty amounts to S$0.61 per share, a 25.6 percent discount to last Friday’s closing price of S$0.82. The mandatory offer price of S$0.57 represents a roughly 30 percent discount.
MSPEA described APAC Realty as one of a limited number of real estate brokerages with regional reach and brand recognition, providing an opportunity to build on a solid foundation without introducing any major changes to the business of the company.
APAC Realty CEO Marcus Chu praised MSPEA’s “outstanding track record and reputation” in Asia, where the Morgan Stanley unit has been making private equity investments for close to 30 years.
“(APAC Realty’s) lead generation and our team of advisors will benefit from MSPEA’s substantial networks and access to industry insights, which could facilitate a deepening of our regional footprint,” Chu said.
Northstar, which manages more than $2.5 billion in committed equity capital, took APAC Realty’s businesses private in 2013 and led a relisting of the firm in 2017.
“The APAC Realty team has been a great partner for Northstar over the past nine years and we are proud to have supported the team in doubling their number of advisors, progressing their regional expansion and enhancing their tech capabilities, all through the implementation of multiple rounds of Singapore real estate market cooling measures,” said Wong Chee-Yann, chief investment officer of Northstar.
APAC Realty has increased its regional presence using the global franchise model of ERA, which provides brokerage services for primary and secondary home sales, as well as rentals of residential, commercial and industrial properties.
Despite these efforts to expand the business, the company’s shares reached their highest value, S$1.26, in March 2018 and slid as low as S$0.32 in April 2020. In the last 12 months, the highest stock price was S$0.93 last August.
After entering into agreements to acquire control of ERA Indonesia and ERA Thailand, APAC Realty acquired a 49 percent stake in ERA Malaysia in 2019 and a 38 percent stake in ERA Vietnam in 2020, establishing a presence in five of the six largest economies in Southeast Asia.
The firm estimates its reach at 474.3 million people, or 71.8 percent of the total ASEAN population of 660.5 million.