SINGAPORE – In a major move to expand its footprint beyond the Asia-Pacific, Keppel Corp has bought a 50 per cent stake in leading European asset manager Aermont Capital for up to $517 million.
Keppel CEO Loh Chin Hua said that the Singapore company is planning to buy the remaining 50 per cent of Aermont in 2028.
The transaction will be funded through a combination of cash and treasury shares acquired through Keppel’s earlier share-buyback programme, and implies a valuation of about 13 times EV/Ebitda (enterprise value/earnings before interest, tax, depreciation and amortisation).
The acquisition of the initial 50 per cent stake in Aermont is expected to be completed in the first half of 2024, following which the deal is expected to be immediately earnings accretive to Keppel.
Keppel said Aermont would bolster Keppel’s recurring income and funds under management (FUM), which is projected to grow by $24 billion to over $77 billion from the current $53 billion.
On a pro forma basis, had the acquisition been effective on Jan 1, 2022, earnings per share for Keppel would have been 52.4 cents versus 52.1 cents actually achieved. Recurring income would have risen to $512 million versus $503 million, while net tangible assets per share of Keppel would have increased to $5.50 from $5.49.
Keppel said the acquisition would have minimal gearing impact on a pro forma basis.
Aermont, which has a 16-year track record and enjoyed a gross internal rate of return of 25 per cent, is one of the largest owners of real estate on the European continent, operating in 10 cities across Europe.
Its investments include assets and businesses in the office, student accommodation, workforce housing, luxury hospitality and production studio infrastructure sectors.
Aermont is ranked the highest among Europe-based real estate firms in terms of funds raised in the last five years.
Mr Loh said the acquisition is a transaction of growth which will be immediately earnings accretive and significantly expand Keppel’s footprint beyond the Asia-Pacific.
“The acquisition of an initial 50 per cent stake in Aermont, with a pathway to an eventual 100 per cent ownership and full integration, marks a major strategic step forward in Keppel’s ambition to be a global asset manager and operator, availing us of a highly attractive European platform with strong recurring fees and a premium network of partners.”
Aermont chairman Leon Bressler said that although his company had received numerous unsolicited offers from around the world, Keppel was the most attractive suitor and best fit.
“Keppel offers something specific and compelling to our franchise; its technical and operating expertise are well-aligned to key megatrends such as the energy transition, digital transformation and urbanisation,” he said. “For Aermont, access to that expertise will help us better capitalise on a number of technology-driven opportunities.”
Mr Bressler added that disclocated markets and developing funding gaps in the European property market would provide huge opportunities for Aermont through 2024 and beyond.
Mr Loh noted that besides the business, assets and earnings, Keppel would also benefit from Aermont’s talent pool comprising an experienced senior team with a proven track record and extensive networks in Europe.
“(Aermont’s) values, culture and operator-oriented approach to creating long-term value are a strong fit with Keppel,” he added.
