Capitaland Investment

[specuvestor]

Agree... the scenario will be totally different if they take the normal process. Thereafter Temasek can do share swap etc to get CAPL wholly owned.

Sneaky yet can't say Temasek is not giving what Mr Market wants... that's the irony

Somehow, this transaction do not seem to be fair. The way to properly do it is to spinoff the asset management side allowing the market to value each segment cleanly allowing existing shareholder to hold on to both part of the company. Temasek could still be majority shareholder for the 2 firms while ensuring that minority rights are well taken care of.

Great deal for Temasek arbitraging earnings multiples inefficiencies of Mr Market

Would be huge deal for OPMI if it was a spin-off instead

[r0n]

There seems to be some meat left considering the price Capitaland is trading at right now versus their projection in their slides. Those who are betting on the deal to go through should get a good boost upon the listing of the investment manager.

The projection has many assumptions (CICT share price, CLIM trading at 1x book value, dilution of convertible bonds) which may not play out in the same way their projection. Hence, the trading discount includes not just the uncertainty of the deal, but also the uncertainty of the consideration of the deal.

[donmihaihai]

Best in class in marketing.

In my language, Temasek is offering to purchase Capitaland property development arm and leave the rest behind. Well, it mean Temasek want 100% of the capital intensive property development arm and only 52% of the heavily marketed remaining business of Capitaland.

Is Temasek paying a fair price for the development arm?

The CLIM is assest and capital efficient. Haha. Fund management is, but what about investment property without the development arm. well, good luck with ROE.

What more the future of CLIM depend on development arm which shareholder has no interest except Temasek. And Temasek has 100% interest in development arm but only 52% interest in CLIM. How does Temasek weight its interest?

[Clement]

Transforming from an integrated property developer into an investment platform might not increase the return on equity of the listed entity. It does however lower the cost of equity by making a larger portion of earnings into recurring income, hence the higher earnings multiple.

I think a lot of the success (from the minority shareholders point of view) of the exercise will be dependent on several factors.

1) It was announced that the group will work towards deconsolidating the REIT portfolio, probably reducing its holdings in the REITs under management. While theoretically a fund manager should enjoy very strong returns on equity as they substitute contractual relationships for capital invested, there is normally a need to maintain a level of co-investment in the funds under management. How far can this reduction be achieved, without the risk of losing control of the REITs, will play a key factor in CLIM's future capital intensity and return on equity.

2) How the 3 way potential conflicts of interests between CLA, CLIM and third party capital under management are handled.

[desmondxyz]

the price is 3.72 now, what is the safe entry level? =)

[Big Toe]

A whole cake is cut into pieces, a part of it is eaten away and the owners of the former cake is compensated with a new cake + cash. That's the best way to describe the deal in one sentence, no?

[Raks]

A whole cake is cut into pieces, a part of it is eaten away and the owners of the former cake is compensated with a new cake + cash. That's the best way to describe the deal in one sentence, no?

I hold more cict (previously cap mall) than capitaland. 
In your analogy, owners of former cake are compensated with a new cake (valuation?) + cash + some slices of another cake. 

Ppl in my position, it's much better for a proper spinoff, GO, ... whatever dont touch cict ("again" for those who only want the capitamall ).

[specuvestor]

It's a portion of the same cake with the largest most desirable strawberry and chocolate

[donmihaihai]

Why just development arm?

Since CLA will be working with CLIM , selling everything except fund management to CLIM.

Getting to the end game straight.

[ghchua]

Is Temasek paying a fair price for the development arm?

Well, analysts will tell you that Capitaland had been trading at 20% to 30% historical discount to NAV. But they offer you at 0.95x book value. I cannot say whether its fair or not as only insiders would be able to know the full value of those development assets. But at least on paper, it is reasonable based on the numbers.

The CLIM is assest and capital efficient. Haha. Fund management is, but what about investment property without the development arm. well, good luck with ROE.

I think there is also a misunderstanding that CLIM will trade at higher valuation post listing. As you have pointed out, there is an investment properties portion which yields low ROE. We have seen property companies with the likes of OUE, Hong Fok, UIC etc which holds mostly PPE and investment properties in their balance sheet, with little development properties. These companies are trading at a significant discount from their book value.

Further to that, I don't know how Capitaland classify an asset as development or under CLIM. The likes of Raffles City Chongqing, Jewell Changi Airport etc are placed under the development side. Any forumer could enlighten me?