Keppel Corporation has agreed to acquire an initial 50% stake in European real estate manager Aermont Capital for up to S$517 million (US$388 million), expanding the Singapore-based company’s presence beyond Asia-Pacific with a significant foothold in Europe.
The proposed deal, which can be funded through a combination of cash and treasury shares acquired through Keppel’s earlier share buyback programme, implies an attractive valuation of 13x EV/Ebitda. It is expected to be completed in the first half of 2024, subject to regulatory and other approvals, and lead to a full acquisition in 2028.
On completion, the transaction is expected to be immediately earnings accretive to Keppel. It will bolster Keppel’s recurring income and funds under management (FUM), which are projected to grow to over S$77 billion from the current S$53 billion, with an approximate one percentage point impact on the company’s net gearing on a pro forma basis.
Established in 2007, Aermont is an independent asset management business focused on real estate and real estate-related investment activities in Europe. It is a leader in opportunistic real estate investments with a proactive operator-oriented approach, emphasizing prime assets and leading businesses across core Western European markets. In 2023, industry publication PERE ranked Aermont the highest among Europe-based real estate firms in terms of funds raised in the last five years.
As at June 30, Aermont had a total FUM of S$24 billion across four active funds and a single asset vehicle, of which approximately S$10 billion in equity commitments were raised in 2022. Its investments have included assets and businesses in the office, student accommodation, workforce housing, luxury hospitality, and production studio infrastructure sectors, among others. Through its funds, Aermont has generated an average realized 25% gross internal rate of return and 2.8x gross multiple on invested capital to date.
“The acquisition of an initial 50% stake in Aermont, with a pathway to an eventual 100% 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 global LPs,” says Keppel chief executive officer Loh Chin Hua.
For Aermont, the proposed transaction provides access to Keppel’s technical and operating expertise, enabling the firm to better capitalize on a number of technology-driven trends and opportunities and opening the door to new fund strategies, such as European data centres.
