ARA Asset Management

[Contrarian]

I expect Cheung Kong likely to reduce influence. Board composition, STC likely to get a board seat. CHEW GEK KHIM will sit on ARA board and possibly play an active role.

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I expect Cheung Kong likely to reduce influence. Board composition, STC likely to get a board seat. CHEW GEK KHIM will sit on ARA board and possibly play an active role.

John Lim is preempting the day when CK eventually fully exits...

[zerobeta]

property price in HK is set to post its biggest decline since 1998 (analysts are predicting AT LEAST a 30% decline by 2015), this will definitely hurt AUM and eventually ARA's bottom line unless they can offset this by increasing the management fee, but can they do so, what has the trend been like in the past?

another issue is the industry has almost no barrier of entry, competition is stiff... with the sentiment in Southeast Asia weak at the moment, will they still be able to raise enough funds for its private funds?

the tremendous growth in AUM in recent years is primarily driven by the skyrocketing property price in HK (especially its Fortune REIT -> just take a look at how much they bought the properties VS the current valuation, that's a remarkable gain).... so if property price corrects, which it will, AUM won't grow as fast as in the past, so we shouldn't value this company using historical PE as guidance (perhaps should use lower PE?)... I tend to think the growth has hit its ceiling... very doubtful the company can double the AUM by 2016 (they said so during the 10th anniversary dinner where the atmosphere was exciting, IMO)

[gutman]

A summary from DBS Group Research :

New wings

• Exciting times with Straits Trading Company as a new strategic partner
• Capital commitment of S$950m; could be multiplied up to S$10bn in potential AUM
• Growth trajectory accelerated; BUY, TP raised to S$2.08

Exciting times ahead with new strategic partner. ARA Asset Management Limited (ARA) and Straits Trading Company Limited
(STC) have announced a strategic collaboration to jointly invest in property. The transaction details: (1) STC will acquire a 20.1%
stake in ARA, from vendor share sales by Cheung Kong and John Lim, (2) ARA will manage STC’s entire real estate portfolio (ex
hospitality) and (3) STC and John Lim will set up a new S$950m co-investment vehicle (Straits Real Estate) to provide seed capital
for new fund products to be managed by ARA

Major shareholders not seen as cashing out. We do not see this transaction as a cashing out step as (i) John Lim, the founder,
continues to show his commitment through re-deploying his capital back into ARA’s business through a new co-investment
vehicle anchored by STC (capital commitment of S$950m), while (ii) Cheung Kong remains a significant supporter through their
stakes in its various managed REITs and 7.8% direct stake.

ARA to benefit from a huge warchest. The S$950m seed capital will form a major source of seed capital for co-investment
opportunities for ARA. This can be multiplied further assuming that it forms 10% of the new AUM that ARA intends to raise. As
a start, S$100m will be invested into a yet-to-be launched ARA development fund.

BUY, TP raised to S$2.08. With a much-needed strong war chest to accelerate its growth trajectory, we see exciting times
ahead for ARA. We have raised ARA’s TP to S$2.08 as we now peg 20x PeE to its AUM business (18x previously).

[gutman]

A summary from DBS Group Research :

New wings

• Exciting times with Straits Trading Company as a new strategic partner
• Capital commitment of S$950m; could be multiplied up to S$10bn in potential AUM
• Growth trajectory accelerated; BUY, TP raised to S$2.08

Exciting times ahead with new strategic partner. ARA Asset Management Limited (ARA) and Straits Trading Company Limited
(STC) have announced a strategic collaboration to jointly invest in property. The transaction details: (1) STC will acquire a 20.1%
stake in ARA, from vendor share sales by Cheung Kong and John Lim, (2) ARA will manage STC’s entire real estate portfolio (ex
hospitality) and (3) STC and John Lim will set up a new S$950m co-investment vehicle (Straits Real Estate) to provide seed capital
for new fund products to be managed by ARA

Major shareholders not seen as cashing out. We do not see this transaction as a cashing out step as (i) John Lim, the founder,
continues to show his commitment through re-deploying his capital back into ARA’s business through a new co-investment
vehicle anchored by STC (capital commitment of S$950m), while (ii) Cheung Kong remains a significant supporter through their
stakes in its various managed REITs and 7.8% direct stake.

ARA to benefit from a huge warchest. The S$950m seed capital will form a major source of seed capital for co-investment
opportunities for ARA. This can be multiplied further assuming that it forms 10% of the new AUM that ARA intends to raise. As
a start, S$100m will be invested into a yet-to-be launched ARA development fund.

BUY, TP raised to S$2.08. With a much-needed strong war chest to accelerate its growth trajectory, we see exciting times
ahead for ARA. We have raised ARA’s TP to S$2.08 as we now peg 20x PeE to its AUM business (18x previously).

I think if we understand ARA's business and the impact of this deal sufficiently, current valuation is really not stretched.

The 40 bil AUM target would probably be reached earlier than expected following this alliance.

[orangesundayyy]

A summary from DBS Group Research :

New wings

• Exciting times with Straits Trading Company as a new strategic partner
• Capital commitment of S$950m; could be multiplied up to S$10bn in potential AUM
• Growth trajectory accelerated; BUY, TP raised to S$2.08

Exciting times ahead with new strategic partner. ARA Asset Management Limited (ARA) and Straits Trading Company Limited
(STC) have announced a strategic collaboration to jointly invest in property. The transaction details: (1) STC will acquire a 20.1%
stake in ARA, from vendor share sales by Cheung Kong and John Lim, (2) ARA will manage STC’s entire real estate portfolio (ex
hospitality) and (3) STC and John Lim will set up a new S$950m co-investment vehicle (Straits Real Estate) to provide seed capital
for new fund products to be managed by ARA

Major shareholders not seen as cashing out. We do not see this transaction as a cashing out step as (i) John Lim, the founder,
continues to show his commitment through re-deploying his capital back into ARA’s business through a new co-investment
vehicle anchored by STC (capital commitment of S$950m), while (ii) Cheung Kong remains a significant supporter through their
stakes in its various managed REITs and 7.8% direct stake.

ARA to benefit from a huge warchest. The S$950m seed capital will form a major source of seed capital for co-investment
opportunities for ARA. This can be multiplied further assuming that it forms 10% of the new AUM that ARA intends to raise. As
a start, S$100m will be invested into a yet-to-be launched ARA development fund.

BUY, TP raised to S$2.08. With a much-needed strong war chest to accelerate its growth trajectory, we see exciting times
ahead for ARA. We have raised ARA’s TP to S$2.08 as we now peg 20x PeE to its AUM business (18x previously).

I think if we understand ARA's business and the impact of this deal sufficiently, current valuation is really not stretched.

The 40 bil AUM target would probably be reached earlier than expected following this alliance.

Hi, I'm new here. Hope I can share some of my thoughts to this as well.

Seems like quite some news for both ARA and STC. Given this is a ARA thread, I will keep my views to solely ARA.

The AUM of $40bil by 2016, as pointed out by you seems not difficult and I agree. Given that they are at $23.5bil now, with STC's assets of around 1 bil, that will make close to $25bil by end of this year. And it is also well publicized that John Lim's target of $2bil yearly through organic growth, that will give another $6 bil in the next 3 yrs to make $31bil. Given ARA's track record of one new REIT/fund yearly, plus their record of acquisitions (ie Fortune REIT's acquisition of Kingswood recently alone is worth $1bil), i should think 2bil a year is do-able.

Based on their press release, ARA's warchest now boost of close to 1bil of committed capital that can support up to 10bil in AUM. And if this also comes true, add 31 + 10, you have $41bil.

Importantly, if you trace the roots of STC Chairman, Chew Gek Khim and her ties with the Tan family, I believe this network is also another important consideration not to be undermined. Such business is all about who you know and how they can open doors for you.

Also not forgetting how much they will be getting from the PROMOD as ADF I is in divestment mode and end of their shelf life.

Lastly, i may be wrong, but I don't believe PE is a good gauge for such real estate fund management business. The more they manage, they more they buy, sell, the more management fees they earn. Hence, the more AUM they have, they more management fees they earn. And given the above, I believe with the AUM growth of $40bil, it should also work wonders for their shareprice.

My 2 cents worth that is. Vested.

[gutman]

A summary from DBS Group Research :

New wings

• Exciting times with Straits Trading Company as a new strategic partner
• Capital commitment of S$950m; could be multiplied up to S$10bn in potential AUM
• Growth trajectory accelerated; BUY, TP raised to S$2.08

Exciting times ahead with new strategic partner. ARA Asset Management Limited (ARA) and Straits Trading Company Limited
(STC) have announced a strategic collaboration to jointly invest in property. The transaction details: (1) STC will acquire a 20.1%
stake in ARA, from vendor share sales by Cheung Kong and John Lim, (2) ARA will manage STC’s entire real estate portfolio (ex
hospitality) and (3) STC and John Lim will set up a new S$950m co-investment vehicle (Straits Real Estate) to provide seed capital
for new fund products to be managed by ARA

Major shareholders not seen as cashing out. We do not see this transaction as a cashing out step as (i) John Lim, the founder,
continues to show his commitment through re-deploying his capital back into ARA’s business through a new co-investment
vehicle anchored by STC (capital commitment of S$950m), while (ii) Cheung Kong remains a significant supporter through their
stakes in its various managed REITs and 7.8% direct stake.

ARA to benefit from a huge warchest. The S$950m seed capital will form a major source of seed capital for co-investment
opportunities for ARA. This can be multiplied further assuming that it forms 10% of the new AUM that ARA intends to raise. As
a start, S$100m will be invested into a yet-to-be launched ARA development fund.

BUY, TP raised to S$2.08. With a much-needed strong war chest to accelerate its growth trajectory, we see exciting times
ahead for ARA. We have raised ARA’s TP to S$2.08 as we now peg 20x PeE to its AUM business (18x previously).

I think if we understand ARA's business and the impact of this deal sufficiently, current valuation is really not stretched.

The 40 bil AUM target would probably be reached earlier than expected following this alliance.

Hi, I'm new here. Hope I can share some of my thoughts to this as well.

Seems like quite some news for both ARA and STC. Given this is a ARA thread, I will keep my views to solely ARA.

The AUM of $40bil by 2016, as pointed out by you seems not difficult and I agree. Given that they are at $23.5bil now, with STC's assets of around 1 bil, that will make close to $25bil by end of this year. And it is also well publicized that John Lim's target of $2bil yearly through organic growth, that will give another $6 bil in the next 3 yrs to make $31bil. Given ARA's track record of one new REIT/fund yearly, plus their record of acquisitions (ie Fortune REIT's acquisition of Kingswood recently alone is worth $1bil), i should think 2bil a year is do-able.

Based on their press release, ARA's warchest now boost of close to 1bil of committed capital that can support up to 10bil in AUM. And if this also comes true, add 31 + 10, you have $41bil.

Importantly, if you trace the roots of STC Chairman, Chew Gek Khim and her ties with the Tan family, I believe this network is also another important consideration not to be undermined. Such business is all about who you know and how they can open doors for you.

Also not forgetting how much they will be getting from the PROMOD as ADF I is in divestment mode and end of their shelf life.

Lastly, i may be wrong, but I don't believe PE is a good gauge for such real estate fund management business. The more they manage, they more they buy, sell, the more management fees they earn. Hence, the more AUM they have, they more management fees they earn. And given the above, I believe with the AUM growth of $40bil, it should also work wonders for their shareprice.

My 2 cents worth that is. Vested.

Indeed, this is a business of relationship. If I remembered correctly, during one of his AGM, John Lim mentioned that he raised 200+ mil during a golf game from the HNWs. You can only do this if you know people and people know you.

The Straits Trading relationship will be a new door.

In an interview early this year (http://www.bloomberg.com/news/2013-03-11...-asia.html) , ARA mentioned that in addition to the US funds, they are also looking at Japan and Korea as potential source of capital. And they plan to expand into new markets like Japan, Australia and India, as well as Southeast Asian countries including Indonesia, Vietnam and Thailand.

I believe all these mean we will see a much higher AUM going forward. At current AUM of $23.5 bil, share price is $1.80+; at AUM of $40+ bil, share price will be .......

Now we understand why Moses K. Song, Chief Investment Officer of ARA bought 200,000 shares in a married deal from John Lim at $1.88 in Feb this year.

Exciting times ahead.
(Vested)

[mrEngineer]

Maybe john lim targeting another 金主 using the relationship of STC. Far East Organisation?

[opmi]

Talking relationships. Nan Fung is the 2nd largest shareholder of Sino Land since 2000s. If any, relationships will be tighter.
Forterra is Nan Fung platform vehicle.

[specuvestor]

So ARA has a good chance to manage Forterra?

[opmi]

So ARA has a good chance to manage Forterra?

a bit OT.

very unlikely. Nan Fung probably want to do a 'ARA' or 'CMA' for themselves.
Nan Fung has inhouse expertise in HK, probably PRC.

Forterra Trust is likely the 'ATM' rather than the asset developer (CMA/ARA type).