CDL to hire dedicated CEO for fund management as it steps up push into private funds
[SINGAPORE] City Developments Ltd (CDL) is making a renewed push into private funds, with plans to hire a dedicated chief executive and management team as it seeks to double its assets under management (AUM) to S$10 billion by FY2029.
The move marks a more concerted attempt by the property giant to build fund management after an earlier target, set in 2018, to grow its fund-management AUM to US$5 billion by 2023 did not materialise amid a prolonged high-interest-rate environment and challenging fundraising conditions.
“We were one foot in, one foot out,” said group CEO Sherman Kwek at a briefing on Monday (Sep 28), as he unveiled CDL’s refreshed three-year growth strategy.
Fund management will become a more significant part of CDL’s capital model, comprising new and existing listed real estate investment trust (Reit) platforms and an expanded private-capital platform via funds, partnerships and joint ventures.
A dedicated fund-management entity will be established, with an investment committee and leadership team “directly responsible” for AUM growth, fee income, profit and loss, and investor outcomes.
CDL’s current capabilities in its core areas of property development, asset management and hospitality will provide a proprietary pipeline of opportunities that can be seeded from CDL’s portfolio or new acquisitions and scaled with third-party capital, the group noted.
Some assets earmarked under CDL’s S$6 billion divestment programme could be seeded into managed vehicles, although Kwek stressed that this would not apply to the entire disposal pool. Its S$3.7 billion living-sector portfolio could provide another source of seed assets for funds, although some properties may first need to be stabilised.
CDL is also open to establishing new Reits when capital-market conditions are conducive, while seeking to strengthen its existing listed platforms, CDL Hospitality Trusts and IReit Global. Kwek added that the group intends to be a more active sponsor of these vehicles.
CDL currently has around S$5 billion in AUM as at Jun 30, comprising S$3.5 billion under CDL Hospitality Trusts, S$1.2 billion under IReit Global and S$300 million in private funds on an attributable basis. It is targeting S$10 billion in total AUM from listed and private platforms by FY2029.
Kwek said he hopes CDL can reach the target earlier.
CDL currently has around S$36 billion of assets on its balance sheet.
“We will never be asset-light; it’s not our DNA,” said Kwek. But CDL needs to “make part of our company more asset-light and more nimble”.
“Fund management, as well as strong capital recycling, are the key ways for us to achieve this,” he added. “By doing fund management well, it will ensure greater capital efficiency. It will grow our recurring fee-related earnings, as well as give us higher return on equity.”
The group can originate deals by seeding its own portfolio assets into managed vehicles or new acquisitions.
Kwek noted that, for any private equity fund set up and managed by CDL, his “personal preference” is for the group to account for no more than 20 per cent of the limited-partner capital.
“This then is a true divestment,” he said. CDL could syndicate investments to third-party capital and release capital for redeployment into higher-yielding opportunities, dividends or debt repayment, he added.
