ARA Asset Management Ltd. (ARA), a real estate investment trust manager partly owned by billionaire Li Ka-shing, posted its biggest gain in more than seven months after agreeing with Straits Trading Co. to jointly invest in property funds.
The stock climbed 4.6 percent to S$1.83 at the close of trading in Singapore, the biggest gain since March 15. Straits Trading (STRTR) advanced 3.6 percent to S$3.78, the most since Aug. 15.
Straits Trading said yesterday it would buy a 20.1 percent stake in ARA for S$294.4 million ($238 million) from Li’s Cheung Kong Investment Co. and Chief Executive Officer John Lim, making it the biggest shareholder. The Singapore-based tin-smelting company said it will also form a new company with Lim to undertake property investments with capital commitment of as much as S$950 million.
These are “exciting times ahead with Straits Trading Company as a new strategic partner,” Derek Tan, an analyst at DBS Vickers Research (Singapore) Pte, said in a note to clients today. “With a much-needed strong war chest to accelerate its growth trajectory, we see exciting times ahead for ARA.”
Tan raised ARA’s target price to S$2.08 from S$1.89.
ARA’s Lim, who will own 19.25 percent of the company, said yesterday that assets under management in the new investment fund will climb to S$10 billion over time. Li’s Cheung Kong will own 7.84 percent after the transaction.
ARA said in March that it plans to double assets under management over five years as its private funds buy more properties. With six REITs listed in Singapore, Hong Kong and Malaysia, ARA planned to expand with acquisitions and enhance existing properties, Lim said in the March interview.
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