DBS Group Research has kept its "buy" call and $3.85 on CapitaLand Investment after it announced the A$200 million ($173 million) acquisition of the property and credit investment business of Wingate Group in Australia.
The acquisition, with the addition of A$2.5 billion in funds under management (FUM), will help CLI grow its FUM in Australia by 30% to $8.3 billion.
This deal, part of CLI's overall bid to reach its FUM target of $200 billion come 2028, will help bring its FUM to $115 billion upon completion, or 7% of the total.
Wingate is described to be an established private credit manager with an extensive track record of over 350 transactions with more than A$20 billion in real estate value over the past 20 years.
DBS, in its Dec 16 note, points out that CLI has recently indicated its commitment to invest some A$1 billion in Australia as it seeks to diversify from other key markets now such as Singapore and China.
DBS notes that CLI has been moving "swiftly" to bulk up its FUM base with a series of "strategic acquisitions" of fund management platforms.
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Prior to Wingate, CLI announced the acquisition of SC Capital in November, taking an initial 40% stake for $280 million. The addition of SC Capital helps beef up CLI's presence in Japan.
DBS reckons that the price/FUM paid by CLI for Wingate is at around 8%. When Regal Group acquired private credit fund manager Merricks Capital back in June, it paid around 8.9% EV/FUM, or 6x on normalised FY2023 EBITDA.
"We remain positive on CLI’s intent to continue growing its presence in Asia Pacific inorganically, which we believe will provide them with on-ground localised knowledge and leadership and growth strategies," says DBS.
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CLI shares as at 3.04 pm was down 0.75% to change hands at $2.63, extending a drop of 15.71% year to date.
