Warburg Pincus mops up bulk of ARA shares held by Chinese trust

US private equity firm Warburg Pincus is set to own nearly half of ARA Asset Management, following the impending exit of AVIC Trust as a shareholder in the real estate fund manager.

ARA on Tuesday announced that AVIC Trust, the investment arm of Shanghai-listed AVIC Capital, will dispose of its 20.48 per cent stake. ARA founder and group chief executive John Lim said the trust has helped and partnered the group in creating new fund products in mainland China.

Meanwhile, Warburg Pincus - already ARA's largest shareholder - will "substantially" raise its stake to 48.70 per cent from its present 30.72 per cent.

ARA's pre-privatisation shareholders - The Straits Trading Company, Mr Lim's JL Investment Group (JLIG), and CK Hutchison Group's flagship CK Asset Holdings - have also committed to increase their ownership slightly. Subject to regulatory approvals and other conditions precedent, they will have an aggregate shareholding of the remaining 51.30 per cent interest in ARA, post-transaction.

Straits Trading, JLIG, and CK Asset currently hold 20.95 per cent, 19.85 per cent and 8 per cent respectively, amounting to a 48.80 per cent interest in total.

The stakes will be raised through a series of secondary transactions, which are expected to complete by May 31, 2021, ARA said on Tuesday. They will represent ARA's first changes to its shareholding structure since its privatisation and delisting from the Singapore Exchange in April 2017.

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ARA announced in late-2016 that Mr Lim was leading a consortium including Warburg Pincus, AVIC Trust, CK Asset (then known as Cheung Kong Property), and Straits Trading to take the group private. The buyout's offer price valued the company at S$1.78 billion and was at a 26.2 per cent premium to the stock's closing price of S$1.41 on Nov 2, 2016.

In the past few years, ARA has taken strategic stakes in real estate platforms in Japan, Australia, Europe, and the US. As at Dec 31, 2019, gross assets managed by ARA stood at S$88 billion versus about S$35 billion as at Dec 31, 2016, before its privatisation.

ARA manages listed and unlisted real estate investment trusts (Reits) and private real estate and infrastructure funds in 28 countries. In Singapore, the Reits it manages include Suntec Reit, ARA Logos Logistics Trust, and ARA US Hospitality Trust.