Capturing opportunities, boosting returns
- Leveraging on entrenched fund management platform to grow AUM by S$8-10bn by 2020
- Kick-start with a new US$600m JV with Qatar Investment Authority
- BUY call, TP of S$4.11 based on 20% discount to RNAV
Reaffirming the group’s focus on growing its established AUM Business.
- CapitaLand Limited (CAPL) aims to launch 5-6 private equity funds with assets under management (AUM) of S$8-10bn by 2020.
- Leveraging on its established fund management competencies, CAPL will partner with increasingly sophisticated capital partners who are looking to deploy capital in the region.
- We believe that CAPL is in a position of strength to deliver, given its entrenched real estate management platform totaling S$43.5bn AUM across 16 non-listed real estate funds and five REITs.
Fund Management platform expected to boost risk-adjusted returns.
- We think that by tapping on 3rd party capital, CAPL would be able to leverage on larger economies of scale, better capitalise on market opportunities and at the same time de-risk its property level exposure.
- We might potentially see CAPL seed some of these new funds with existing development projects on its balance sheet.
- Looking forward, we believe this platform will be able to drive medium-term shareholder returns towards its medium-term target ROE of 8-12%.
Kicking start with a US$600m joint venture with Qatar Investment Authority.
- Ascott Limited announced a 50/50% US$600m joint venture fund with Qatar Investment Authority (QIA). The fund has a ten year mandate to invest in value-added opportunities in serviced residences globally but with an initial focus in Asia Pacific and Europe.
- Under terms of the partnership, the JV will
- have exclusive rights over deals available to Ascott (after accounting for current ROFRs);
- Ascott would have first right to manage properties acquired by the fund; and
- Ascott Residence Trust (ART) would be granted right-of-first-refusal over these properties upon exit.
- Total AUM for this fund is estimated to be US$1.2-1.5bn, assuming 50-70% leverage.
Maintain BUY, TP S$4.11.
- The stock trades at an attractive 0.8x P/Bk and we see the gap closing on the back of the group reporting strong results due to:
- locked-in sales across its development projects in Singapore and China; and
- potential gains when divesting stabilised assets into its listed REITs/funds.
(Derek TAN; Rachael TAN; Mervin SONG, CFA)
Source: http://www.dbsvickers.com/
