Warburg Pincus has announced it will lift its interest in ARA Asset Management to almost 50% of the company’s issued shares.
In the first changes to the shareholding structure since it was taken private in 2017, 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.
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.
Through a series of secondary transactions expected to be completed next year, the Warburg Pincus will increase its stake in the firm from 30.72 percent to 48.7 percent, according to a joint statement.
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.
ARA has since doubled its gross assets under management, 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.
Mr John Lim, ARA Group CEO and Co-founder said, “With the strong support of our formidable shareholders, ARA has enjoyed a significant growth trajectory since its privatisation. The gross assets managed by the Group and its Associates has more than doubled since privatisation, and our footprint has expanded to more than 100 cities across 28 countries. The investment from our shareholders demonstrates their confidence in our solid track record and future growth potential. I would like to take this opportunity to thank our shareholders, investors and business partners for their unwavering support over the years. In particular, I would like to register our appreciation to AVIC Trust for helping and partnering with us in creating new fund products in Mainland China.”
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. In March, the firm announced that it had acquired a majority stake in 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.
ARA have also been pushing hard to appoint a Director to the board of Cromwell having acquired a near 20% stake in the AREIT. So far, those attempts have failed, however the pressure on Cromwell intensifies.
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.
Mr Jeffrey Perlman, Managing Director, Head of Southeast Asia at Warburg Pincus said, “Alongside our fellow shareholders, we are pleased to have supported and contributed to ARA’s significant growth over the past few years. The substantial increase in our shareholding in ARA demonstrates our strong confidence in its scalable business model and John’s visionary leadership. We look forward to leveraging our strong capital base to help the business become the largest real estate fund management platform in Asia Pacific and one of the largest globally. Lastly, we want to acknowledge AVIC Trust’s strong contribution to the business and look forward to working with them again in the future.”
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