Keppel Announces $1B Buyout of European Asset Manager Aermont

Keppel Corp has agreed to buy out European fund manager Aermont Capital in a deal worth up to €931.86 million ($1 billion) as the Singapore-based conglomerate continues its efforts to transform into a global asset management giant.

Keppel, through its fund management division Keppel Capital, has entered into an agreement with the Luxembourg-based fund manager to acquire an initial 50 percent stake from the six partners that own the firm for €356.86 million. The €575 million acquisition of the remaining 50 percent stake in the European firm is expected to take place in 2028, Keppel announced late Wednesday.

Following completion of the transaction, Aermont will become Keppel’s European property arm, with the firm’s portfolio of offices, student accommodation, workforce housing, hotels and production studios across 10 Western European cities coming under the Singaporean firm’s management.

“Aermont Capital runs an established and highly successful asset management platform in Europe, raising the most capital among European real estate funds in the last five years, despite the COVID-19 pandemic,” said Loh Chin Hua, chief executive office of Keppel. “[The acquisition] marks a major strategic step forward in Keppel’s ambition to be a global asset manager and operator, availing us of a highly attractive European platform with strong recurring fees and a premium network of global LPs.”

Distressed Opportunities Eyed

Completing the initial investment is expected to boost Keppel’s funds under management (FUM) by 45 percent to S$77 billion ($57.83 billion) as it works toward its previously stated goal of having S$100-billion under management by 2026.

Including the €3.8 billion it had raised by the time of the initial closing of its Fund V in March 2022, Aermont has organised launched and managed four opportunistic funds and a single asset vehicle since its inception 16 years ago.

Previously known as PW Real Assets, the fund manager was spun off from New York-based Perella Weinberg Partners in 2015. With S$24 billion in funds currently under management, Aermont has achieved an average realised gross internal rate of return of 25 percent for its partners to date. The company manages fund on behalf of a pool of over 50 global institutions including public pension funds, sovereign wealth funds, endowments and foundations.

Aermont chairman Léon Bresslerm said in a briefing on Wednesday that the firm has ample capital reserves and is well-positioned to take advantage of distressed opportunities in the European market, which has been suffering from declining in real estate values over the past 20 months. He expects dislocations to dominate the region’s property market in the next two years.

“Keppel offers something specific and compelling to our franchise; its technical and operating expertise are well-aligned to key megatrends such as the energy transition, digital transformation and urbanisation,” Bresslerm said. “Access to that expertise will help us better capitalise on a number of technology-driven opportunities.”

With the fresh investment, Keppel expects Aermont’s FUM will more than double to S$60 billion by 2030 through co-creation of European credit funds, data centre funds and other private investment vehicles.

Keppel said it will fund its initial investment through a mix of cash and treasury shares, with the deal expected to close in the first half of next year, subject to regulatory approvals.

Following the initial stake purchase, the two companies will undergo a four-year transition period before proceeding with the second phase of the takeover which would involve Aermont’s full integration into Keppel in the first half of 2028, subject to performance measures and regulatory approvals.

Joining the Big Leagues

While Keppel has already invested in data centres in Europe through its digital infrastructure arm, Keppel DC and green infrastructure on the continent via Keppel MET Renewables, Loh told the same briefing that acquiring Aermont will provide the Singapore conglomerate with a significant real estate investment operation beyond Asia Pacific.

Assets in Aermont’s portfolio include the 27-storey Tour Blanche office tower in Paris, an ongoing mixed-use development project in Berlin and Britain’s Pinewood Studios, where James Bond and Star Wars productions have been filmed.

Loh said working with the senior team at Aermont, led by its chairman Bresslerm and managing partner Paul Golding, will add significant value to Keppel as it scales up its business.

Analysts at UOB Kay Hian also expect the acquisition to deliver growth and help Keppel achieve diversification both in its investment geography and its investor base.

“Keppel’s acquisition of top-ranked Aermont Capital arguably puts the company into the league of global asset managers,” the analysts said in a note published on Thursday. “How the combined entity takes advantage of the macro and real estate issues in Europe over the next five years will be worth watching.”

Restructuring Steams Ahead

In May, Keppel unveiled a plan to transform the group’s current conglomerate structure into a global fund management firm, aiming for S$200 billion in assets under management by 2030.

In October, Keppel followed through on the plan by buying out full ownership of private credit specialist Pierfront Capital Fund Management by acquiring the remaining 50 percent it did not yet own for an undisclosed sum.

Also in October, the company bought a pair of school campuses in Sydney on behalf of its Keppel Education Asset Fund for A$198 million (then $125 million).

Back home, Keppel during November agreed to purchase the Wilkie Edge commercial and residential complex in Rochor district for around S$350 million.