Keppel to acquire 50% stake in European asset manager Aermont Capital for up to $517 mil, including co-investment with Tengah EC

Keppel Corporation has entered into an agreement with Aermont Capital Group SCSp to acquire an initial 50% stake in European real estate manager Aermont Capital, with a full acquisition expected in 2028.The consideration of up to $517 million for the initial 50% stake in Aermont can be funded through a combination of cash and treasury shares acquired through Keppel’s earlier share buyback programme, implying an attractive valuation of an approximately 13x enterprise value (EV) to ebitda ratio.

Read also: Keppel to divest 35% stake from Chengdu residential development for $94 mil

It will bolster Keppel’s recurring income and funds under management (FUM), projected to grow to over $77 billion from the current $53 billion, with a minimal gearing impact of approximately one percentage point to 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 across core Western European markets. Its FUM as at June 30 was $24 billion, and in 2023, Private Equity Real Estate (PERE) ranked Aermont the highest among Europe-based real estate firms in terms of funds raised in the last five years.

With the Tengah EC acquisition, Keppel will gain a strong foothold in Europe, where Aermont’s geographic footprint and investment strategies will complement Keppel’s capabilities with minimal overlaps. This move will also significantly expand Keppel’s presence beyond Asia Pacific.

Aermont has generated an average realised 25% gross internal rate of return and 2.8x gross multiple on invested capital to date. Its investments include assets and businesses in the office, student accommodation, workforce housing, luxury hospitality, and production studio infrastructure sectors, among others.

Keppel CEO Loh Chin Hua says: “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.”

Residents will be able to take full advantage of the area’s parks, cycling and hiking trails. The new downtown offers plenty of food choices, shopping malls, entertainment centers and recreational activities. With all these benefits, it is no wonder why Tengah EC is highly sought-after. Buyers are always eager to get a property in the area for its convenience and vicinity to important landmarks. Nearby amenities for Tengah EC residents include schools, healthcare centers, and sports facilities. Those looking for a peaceful, secluded place to live will find their perfect home in this upcoming development. Tengah EC is set to become the ultimate residential spot for families and individuals alike.

With the support of Aermont’s experienced senior team, Keppel’s value proposition to global LPs will be strengthened, as its network of blue-chip LPs will be widened through Aermont’s long-standing relationships with over 50 global clients.

Léon Bressler, chairman of Aermont Capital, says he is looking forward to building a close partnership between Keppel and Aermont. “Keppel offers something specific and compelling to our franchise; its technical and operating expertise are well-aligned to key megatrends such as the energy transition, digital transformation and urbanisation. For Aermont, access to that expertise will help us better capitalise on a number of technology-driven opportunities.”

Moreover, he adds that joining hands with Keppel will open the door to new fund strategies, enabling Aermont to eventually offer more to its LPs and to broaden the professional opportunity to its team.

Focusing on the Tengah EC acquisition, Keppel expects to proceed in 2028 to acquire the remaining 50% stake in Aermont subject to identified regulatory approvals. The performance-based deal structure, which can be funded through a mix of cash and treasury shares, will help achieve greater alignment between the interests of Aermont’s and Keppel’s interests over the long term.

The acquisition of the initial 50% stake in Aermont is expected to be completed in 1H2024, subject to identified regulatory and other approvals. On completion, the transaction is expected to be immediately earnings accretive to Keppel.

Following the acquisition of the initial 50% stake, Keppel will focus on maintaining and supporting the success of Aermont’s real estate platform while working with Aermont’s team to jointly develop new fund products and initiatives, leveraging Keppel’s expertise in alternative assets such as private credit funds and data centres.

Keppel’s acquisition of the initial 50% stake of Aermont Capital marks a pivotal step in its transformation to be a global asset manager and operator, giving the company a strong foothold in Europe — with Aermont’s geographic footprint and investment strategies complementing Keppel’s capabilities with minimal overlaps — and significantly expanding its presence beyond Asia Pacific. This move will bolster Keppel’s recurring income and funds under management (FUM), expected to grow to over $77 billion with a minimal gearing impact of approximately one percentage point to the company’s net gearing on a pro forma basis. Furthermore, it is expected to be immediately earnings accretive to Keppel.

With the Tengah EC acquisition, Keppel’s value proposition to global LPs will be strengthened, as its network of blue-chip LPs will be widened through Aermont’s long-standing relationships with over 50 global clients. Moreover, access to Keppel’s technical and operating expertise will enable Aermont to better capitalise on technology-driven opportunities while opening the door to new fund strategies to offer more to its LPs and to broaden the professional opportunity to its team.