Savills Investment Management is taking its penchant for Korean partners to another level after its parent company agreed to sell a 25 percent stake in the fund manager to Seoul-based insurance giant Samsung Life for £63.75 million ($90.4 million).
The deal values the unit of London-based property services firm Savills Plc at over $360 million. Under the terms announced Thursday, South Korea’s biggest insurer will also commit $1 billion in capital to Savills IM’s investment strategies over the initial four years of the relationship, which the parties describe as a strategic investment alliance.
“This transformational alliance will be unique in the industry, combining Savills IM’s existing strengths as an investment manager with extensive local transaction and asset management capability in real estate debt and equity markets, with the strong capital support of Samsung Life,” said Savills IM chief executive Alex Jeffrey. “It will significantly enhance and accelerate our ability to provide attractive investment products for all our investment clients.”
The deal is the latest step aligning Savills IM with the Asia Pacific region, after the firm moved its headquarters from London to Singapore two years ago when it named Jeffrey as global CEO based in the Lion City.
As South Korea has become a growing source of cross-border investment capital in recent years, the fund manager has also executed several European acquisitions on behalf of Korean investors, including Samsung.
Its quarter-stake will make Samsung Life the first external shareholder in Savills Investment Management, with Savills Plc retaining the remaining 75 percent stake in its fund management subsidiary.
Samsung Life has an option to increase its interest by up to a further 10 percent over the initial four years, Savills IM said. The size of the increased stake would depend on the quantum and timing of the provision of capital to the British firm’s investment products, the maximum being achievable if at least $2 billion in capital is committed.
The transaction is subject to regulatory approval and is expected to close in the fourth quarter of 2021.
Attracting Korean Capital
While information has not been made public regarding earlier investments by Samsung Life in Savills IM funds, the companies are known to have worked together in 2018, when the UK firm managed the acquisition of a London office building on behalf of the Korean giant.
Samsung SRA Asset Management, the real estate investment arm of Samsung Life, paid a reported £320 million (then $457 million) that year to purchase 200 Aldersgate in the City of London, with Savills IM acting on behalf of the Korean firm.
Savills IM has also worked extensively with South Korea’s Vestas Investment Management, including teaming up with the Seoul-based firm last November to launch a pan-European logistics investment fund targeting a gross asset value of up to €500 million ($604 million).
Vestas European Strategic Allocation Logistics Fund is one of the first-ever blind funds raised solely by Korean institutions for investment in European real estate. Known as VESALF I, the fund seeks logistics assets of €40-140 million across all of the continent’s key markets.
Also last year, Savills IM and Vestas had partnered on the €71 million acquisition of a warehouse property in Poland from Invesco Real Estate, the property arm of the US investment giant, as well as the purchase of Danish transport company DSV’s global headquarters and two logistics assets near Copenhagen.
In 2019, Vestas and Savills IM had acquired the Charlement Exchange commercial block in Dublin for €145 million, and a year earlier had paid £267 million to purchase 125 Shaftesbury Avenue, a freehold office building in London’s West End.
As part of Savills IM’s new alliance, the fund manager will form a close working relationship with Samsung SRA, seeking to bring additional Korean client capital to Savills IM’s products.
“We are confident that Savills IM is well positioned to help us expand our real estate investment network globally and that this strategic alliance, underpinned by our capital provision, will support and accelerate Savills IM’s growth over the long term,” said Samsung Life chief executive Youngmuk Jeon.
Savills IM reported a profit before tax of £14.9 million for 2020. The gross assets that are the subject of the transaction with Samsung Life amounted to £101.4 million as of 31 December 2020. The proceeds from the sale will be used by Savills Plc for general corporate purposes.