SINGAPORE – Mapletree Investments and Singapore-listed CapitaLand Investment (CLI) are exploring a merger, the Wall Street Journal reported on Nov 3, citing unidentified sources.
The report says the plans are in the very initial stages and a deal may or may not materialise.
A merger could create one of Asia-Pacific’s top property companies with more than US$150 billion (S$195 billion) in assets under management.
Mapletree declined to comment in response to queries from The Straits Times.
A CapitaLand spokesperson told ST: “CLI remains firmly committed to delivering long-term value for its shareholders and in the ordinary course of its business, it regularly explores and evaluates various investment opportunities that align with its strategic objectives.
“We are aware of recent market speculation. As a matter of policy, CLI does not comment on rumours or speculation.”
The spokesperson added that should there be any matters requiring disclosure, CLI will make the announcements in accordance with the Singapore Exchange listing rules.
One source told WSJ that the process is part of recent moves by Temasek-owned entities to evaluate options for growing their businesses into larger, stronger global entities. Mapletree Investments is wholly owned by Singapore’s investment company Temasek, which also holds 54 per cent of CLI.
Temasek said in August that it will focus on active portfolio management of its Singapore-based Temasek portfolio companies, under its new entity Temasek Singapore – which was one of three new entities it set up as a result of a restructuring to manage distinct portfolio segments.
Temasek Singapore also aims to enable the Temasek portfolio companies to be globally competitive while staying rooted in Singapore.
During a press conference then, Temasek chief executive and executive director Dilhan Pillay also brought up the successful example of the merger of Keppel and Sembcorp’s offshore and marine businesses into Seatrium.
This is also not the first time there has been market talk of a merger between Mapletree Investments and CLI.
CLI had $117 billion in assets under management as at August, while Mapletree Investments had $80.3 billion as at March.
CLI also has stakes in seven listed real estate investment trusts (Reits) and business trusts – including CapitaLand Integrated Commercial Trust, CapitaLand China Trust and CapitaLand Ascendas Reit – and a suite of private real asset vehicles.
Some key properties in its portfolio include Raffles City Singapore, CapitaSpring, CapitaGreen, Asia Square Tower 2, ION Orchard, Bugis Junction and Plaza Singapura, as well as Raffles City Chongqing and Suzhou Centre Mall.
Meanwhile, Mapletree Investments manages three Singapore-listed Reits – Mapletree Logistics Trust, Mapletree Pan Asia Commercial Trust and Mapletree Industrial Trust – and nine private equity real estate funds.
Key properties in its portfolio include VivoCity and Mapletree Business City in Singapore, Hong Kong retail mall Festival Walk and UK business park Green Park.
Morningstar equity analyst Xavier Lee said that if both investment companies were to merge, the market can expect a consolidation of the Reits currently managed by both entities to mitigate potential conflicts of interest.
“That said, Reit mergers are often complex and may face resistance from minority unit holders due to concerns around valuation, distribution per unit dilution, and portfolio composition.”
Mr Lee added that from CLI’s perspective, a merger with Mapletree Investments would create a formidable international real estate platform.
“This could unlock cost synergies, similar to those achieved during the CapitaLand-Ascendas-Singbridge merger in 2019,” he said.
CapitaLand completed an $11 billion acquisition of Ascendas-Singbridge in June 2019 and the group became one of Asia’s largest diversified real estate players with over $123 billion of assets under management at the time.
But Mr Lee said that in terms of asset class diversification, an acquisition by CLI of Mapletree may offer limited incremental benefit, as CLI already has broad exposure across similar segments.
“Additionally, Mapletree’s development arm may require restructuring or exclusion from the deal to align with CLI’s asset-light fund management strategy,” he noted.
CLI shares rose 0.8 per cent to close at $2.66 on Nov 3.
