SINGAPORE – CapitaLand shares jumped when the market opened on Monday (June 28) after the property giant said it will divest partial stakes in six of its Raffles City developments in China for 46.7 billion yuan (S$9.6 billion) to Ping An Life Insurance Company of China.
CapitaLand shares were up four cents or 1.1 per cent to $3.72 at 10.30am, while the Straits Times Index was up 0.2 per cent.
The group is divesting partial stakes in Raffles City Shanghai, Raffles City Beijing, Raffles City Ningbo, Raffles City Chengdu, Raffles City Changning (Shanghai) and Raffles City Hangzhou.
It will retain effective stakes of between 12.6 per cent and 30 per cent in each development. The group currently holds effective stakes of 30.7 per cent to 55 per cent in the properties.
CapitaLand said it expects to gain net proceeds of more than $2 billion from the transaction, which is expected to complete in the third quarter of 2021.
It is also expecting additional fee income from providing asset management services for these developments moving forward, said group chief executive Lee Chee Koon.
Puah Tze Shyang, CapitaLand China’s chief executive, said some of the unlocked capital will be used to support the group’s investment pivot to new economy assets such as business parks, logistics and data centres, forming a new pipeline for future recycling.
CapitaLand plans to grow its China exposure in this sector to $5 billion over the next few years, from the $1.5 billion at end 2020, he added.
In line with this investment strategy, CapitaLand announced in April a 3.66 billion-yuan investment to acquire its first hyperscale data centre campus in Shanghai.
With the latest transaction, CapitaLand has made gross divestments of about $11.2 billion year to date, which is more than three times its annual divestment target of $3 billion, Mr Lee said. At the same time, it has grown its funds Under Management to $79.2 billion.
CapitaLand last week announced it has registered as a private equity (PE) fund manager in China, and plans for a renminbi-denominated fund product in Q4 of 2021 that can capture investment opportunities in new economy assets.
Mr Lee on Monday said said the group’s PE fund manager status “has opened up more capital partnership opportunities with domestic institutional investors for CapitaLand”.
“With multiple recycling vehicles and strategies, as well as diverse capital sources, we are confident of our next stage of growth as an asset-light, capital-efficient global real estate investment manager with a focus in Asia,” he said.