Lim is of the view that CLI should deliver an ROE that is above its cost of capital, which is a high bar. In a survey of 165 companies with price to book values of less than 0.6 times, only six companies recorded ROEs higher than their cost of capital. However, 13 companies from the same sample delivered higher ROE than their weighted average cost of capital.
Depending on how shareholders vote on Aug 10 in an EGM and scheme meeting, CapitaLand Investment (CLI) is likely to make an appearance on the Singapore Exchange on Sept 17. When it does, investors may ponder, how heavy or light should CLI’s balance sheet be?
During a briefing on Aug 17, Andrew Lim, group CFO of CapitaLand and CFO-designate of CLI, says, “if you look at CLI, it’s a hybrid. It’s not a pure real estate investment manager (REIM). [At listing] it comes with a heavy component of balance sheet equity underpinned by assets and stakes in funds and REITs. We believe in maintaining, and to deploy that headroom. If we have equity that we can raise that brings in another component and allows us to deliver transformative growth.”
