Keppel, co-investors in deal to buy Shanghai's Yi Fang Tower for $916m

Yi Fang Tower is a recently completed prime Grade A office and retail mixed-use development on the banks of Shanghai's Huangpu River.
Yi Fang Tower is a recently completed prime Grade A office and retail mixed-use development on the banks of Shanghai's Huangpu River.PHOTO: KEPPEL CORP

SINGAPORE - Keppel Corporation and co-investors have signed a deal to acquire Yi Fang Tower, a commercial development in Shanghai, China, for 4.6 billion yuan (S$916 million), the company said in a bourse filing on Tuesday.

This will be done through Keppel subsidiaries under its asset management and property arms, and follows a shareholders' agreement made on March 25 over joint venture company North Bund Keppel.

North Bund Keppel entered a framework agreement on Sept 3, 2018, with Yi Fang Tower's seller, Yi Fang Jing Yi Enterprise Management, to acquire the property. The deal is expected to be completed in the second quarter of 2019.

After the initial round of funding through the subscription of shares outlined in the shareholder's agreement, North Bund Keppel will have a paid-up capital of around US$302 million.

North Bund Keppel is currently held by a wholly-owned subsidiary of Alpha Asia Macro Trends Fund III (AAMTF III), a fund managed by Alpha Investment Partners, the private fund management arm of Keppel Capital Holdings, which is Keppel Corp's asset management arm.

Following the shareholder's agreement, AAMTF III will hold 42.1 per cent of North Bund Keppel shares, while Keppel Land China, a wholly-owned subsidiary of Keppel Land, the property arm of Keppel Corp, will have a 29.8 per cent stake. The remaining 28.1 per cent shareholding will be held by other co-investors.

The group also disclosed that Tow Heng Tan, Veronica Eng and Loh Chin Hua, who are directors of Keppel Corp, are investors in AAMTF III. Aside from these individuals, none of Keppel Corp's directors and controlling shareholders have any interest, direct or indirect, in the transaction, other than through their shareholding interests.

Yi Fang Tower is a recently completed prime Grade A office and retail mixed-use development on the banks of Shanghai's Huangpu River, comprising two 18-storey office towers and a retail podium.

It has a total gross leasable area of about 74,400 square metres, comprising about 47,500 sq m of office space and about 26,900 sq m of retail space. The filing added that it is strategically located in the centre of the North Bund area and is in close proximity to the Lujiazui Financial Centre and the Bund, a waterfront area in central Shanghai.

The transaction is not expected to have any material impact on the earnings per share and net tangible asset per share of Keppel Corp for the current financial year, the group added.