Warburg Pincus Boosts ARA Stake as China’s AVIC Bows Out

Warburg Pincus is boosting its interest in ARA Asset Management to almost half of the company’s issued shares, in the first changes to the shareholding structure of the Singapore-based fund manager since it was taken private in 2017.

Through a series of secondary transactions expected to be completed next year, the US private equity giant will increase its stake in the firm from 30.72 percent to 48.7 percent, according to a joint statement.

China’s AVIC Trust, the investment management arm of state-run Aviation Industry Corporation of China, will exit as a shareholder, after previously holding a 20.48 percent shareholding.

John Lim, CK Asset, Straits Top Up

As part of the same set of transactions, ARA co-founder and group chief executive officer, John Lim, together with Li Ka-shing’s CK Asset Holdings and Singapore’s Straits Trading Company have all committed to increase their shareholding in the firm from an aggregate 48.8 percent to 51.3 percent.

The changes to the shareholding structure come three and a half years after ARA delisted from the Singapore stock exchange following a S$1.8 billion ($1.3 billion) buyout led by Warburg Pincus and AVIC Trust in cooperation with Lim, who had founded the company in 2002 together with CK Asset’s predecessor Cheung Kong Property Holdings, and Straits Trading.

“With the strong support of our formidable shareholders, ARA has enjoyed a significant growth trajectory since its privatisation,” said Lim, adding that the backing from the company’s shareholders demonstrated their confidence in the firm’s “solid track record and future growth potential”.

Doubling Assets Under Management

ARA has doubled its gross assets under management since privatisation, growing from S$35 billion in 2016 to S$88 billion as of 31 December 2019.

These holdings are managed through real estate private equity and credit funds, along with infrastructure ventures and 21 REITs, with this array of vehicles spanning 28 countries.

Jeffrey Perlman, Warburg Pincus’ head of Southeast Asia, said that the US private equity giant plans to leverage its capital base to enable ARA to become the largest real estate fund management platform in Asia Pacific and one of the largest globally.

“The substantial increase in our shareholding in ARA demonstrates our strong confidence in its scalable business model and John’s visionary leadership,” Perlman noted.

Arming Up on Logistics

In 2020 ARA has continued its expansion by ramping up its logistics, in a move that coincides with growing investor demand for warehouse projects as market analysts predict that growing dependence on online shopping amid the COVID-19 era drive demand globally.

Just two months ago, the firm announced that it had acquired a majority stake in Asia Pacific logistics real estate developer and fund manager Logos Group for an undisclosed sum.

That transaction provided ARA with control of one of the region’s largest warehouse developers, adding to the firm’s holdings in Cache Logistics Trust, an SGX-listed REIT that has a portfolio of 27 properties in Singapore and Australia worth S$1.26 billion.

Expanding Global Footprint

Although ARA’s Lim in a note to investors last month preached prudence in the midst of the coronavirus pandemic, the firm has continued to pursue fresh investments this year.

Just two months ago ARA agreed to pay an undisclosed sum to take a majority stake in London-based non-bank lender Venn Partners LLP in March as its initial foray into real estate debt opportunities.

That London deal came just two weeks after ARA together with British Columbia’s Quadreal Property Group to complete the acquisition of a A$300 million Melbourne office development.

Eyeing Growth in Asia

For Warburg Pincus, the increase in its ARA stake comes just six months after its bet on Asia Pacific logistics developer and fund manager, ESR, paid off in Hong Kong’s second-largest IPO of 2019.

That October listing saw ESR raise HK$14 billion ($1.8 billion) after the firm had been forced to shelve the IPO in June when anti-government protests broke out in the city.

The US private equity giant is also a major backer of Hong Kong’s Weave Co-living and mainland China industrial and office park developer D&J China.