By The Edge Singapore

Atiqah Mokhtar Published on Mon, Jun 28, 2021 

CapitaLand has entered into conditional agreements to divest partial stakes in a group of companies that own six of its Raffles City developments in China to Ping An Life Insurance Company China at an agreed portfolio value of RMB46.7 billion ($9.6 billion). 

The transaction is expected to generate net proceeds of more than $2 billion for CapitaLand.  

The deal portfolio comprises Raffles City Shanghai, Raffles City Beijing, Raffles City Ningbo, Raffles City Chengdu, Raffles City Changning (Shanghai) and Raffles City Hangzhou. 

Post-transaction, CapitaLand will retain an effective stake of 12.6% to 30% in each development. The transaction is expected to complete in 3Q2021. 

CapitaLand will also continue to provide asset management services for these developments and earn fee income.  

“We are pleased to welcome Ping An as a strategic partner on board our established Raffles City platform,” says Lee Chee Koon, group CEO of CapitaLand Group. 

Lee also notes that CapitaLand has built up an investment property pipeline of over $24.4 billion of assets in China. “We are looking forward to forging more capital partnerships with China’s domestic institutional investors to diversify CapitaLand’s investor base,” he adds. 

CapitaLand had on June 24, announced that it had obtained private equity fund manager status in China, which Lee says has opened up more capital partnership opportunities with domestic institutional investors for CapitaLand. 

“Including this transaction, CapitaLand has announced gross divestments of about $11.2 billion year-to-date, more than three times our annual divestment target of $3 billion.  Concurrently, we have grown our funds under management (FUM) to $79.2 billion,” Lee says.

Puah Tze Shyang, CEO, investment and portfolio management, CapitaLand China, says, “For the six Raffles City developments in the transaction, their property value had appreciated since their respective completion to RMB46.7 billion; and they achieved a private fund fee related earnings (FRE) / FUM ratio of approximately 62 basis points, averaged across 2008 to 2020.” 

“As mature assets offering stable recurring income, they offer an attractive investment proposition for our new onshore partner,” adds Puah. 

Shares in CapitaLand closed down 4 cents or 1.08% lower at $3.68 on June 25.