SINGAPORE - Shares of CapitaLand were traded heavily on Monday (July 19) after the company filed notices for an extraordinary general meeting and a scheme meeting on the Singapore Exchange (SGX) the day before.
CapitaLand is seeking shareholders' approval for the privatisation of its real estate development business and listing of its fund management and property investment arm.
The shares closed at $3.88, up seven cents, or 1.84 per cent, from the previous close. More than 18 million shares exchanged hands during the day.
The company first proposed the restructuring in March. Notices of the meetings, which will be held on Aug 10 at 2pm, were issued after Evercore Asia (Singapore), CapitaLand's independent financial adviser, said last Saturday (July 17) that the proposal is "fair and reasonable" and recommended shareholders vote in favour of the deal.
If approved, the deal is expected to unlock better value for CapitaLand shareholders, whose shares have been trading at a 20 per cent to 25 per cent discount to net asset value (NAV) in recent years, CapitaLand group chief executive Lee Chee Koon said.
The listed entity, which will be called CapitaLand Investment (CLI), will also be the largest real estate investment manager on the local bourse with $115 billion in assets under management.
The new CLI business model will comprise two revenue segments: fee income through asset management and lodging management, and real estate investments.
For every CapitaLand share held, eligible shareholders will receive one CLI share, 95.1 cents in cash and 0.155 units in CapitaLand Integrated Commercial Trust (CICT). This works out to be a total of $4.102 in value per share.
CICT is the largest real estate investment trust listed on the SGX. It owns a total of 22 retail and office properties in Singapore and two in Frankfurt, Germany.
After a capital reduction exercise, CapitaLand will distribute approximately 48.24 per cent of the issued ordinary shares in the capital of CLI to eligible shareholders, while CapitaLand will own the remaining 51.76 per cent stake.
Mr Lee said the restructuring is a "logical next step" to accelerate the growth of CapitaLand's businesses and is expected to enable CLI shares to trade closer to its NAV.
He added that since the start of the year, CLI has increased its funds under management (FUM) by over $1 billion as at March 31, with a focus on new economy assets such as data centres and logistics parks.
As at December 31 last year, CLI's FUM was approximately $78 billion, with more than 80 per cent of its assets located in Asia. By 2024, it aims to raise its FUM to $100 billion.
CLI currently oversees more than 330 commercial/integrated and new economy buildings spanning more than 18 million sq m of gross floor area, as well as approximately 123,000 lodging units.
Meanwhile, the company has also announced over $11.2 billion in gross divestments year to date, which is three times higher than the company's annual recycling target of $3 billion.
This includes the divestment of partial stakes in six of its Raffles City developments in China to Ping An Life Insurance Company of China for 46.7 billion yuan (S$9.8 billion) in June.
CapitaLand has also successfully registered as a private equity fund manager in China. Mr Lee said the fund management licence will enable it to tap a huge capital base in the country and benefit from its growth potential.
He added that CapitaLand's deal with Ping An demonstrates its ability to work with partners in China and has since generated a high level of interest from other investors.
"All these initiatives are already contributing to NAV upside for CLI. This restructuring not only unlocks immediate value for shareholders, it is also intended to unleash longer-term value as listed real estate investment managers generally trade at a premium to their NAVs in the capital markets", CapitaLand said.
If approved, the restructuring is expected to be completed around mid-September, after which CapitaLand will be delisted from the SGX.