Such a deal, of course, is “potentially transformational” for CLI over the medium term. The two entities coming together will help speed up CLI’s funds under management (FUM) target of $200 billion. “The rationale is straightforward, we think. As capital tightens, scale has become the defining advantage for real estate platforms,” say the UBS analysts.
UBS analysts Michael Lim and Terence Lee believe that the rumoured merger of CapitaLand Investment (CLI) and Mapletree Investments has a “higher probability” of happening than what the market is now pricing in. Both local property giants are controlled by Temasek — CLI is publicly traded and its share price is sticking out as a laggard as the broader market marches to new record levels; Mapletree is less exposed as it remains privately held but holds, via its various REITs, certain underperforming assets amid other near-term headwinds.
Since the latest round of reports hinting at the potential merger, market watchers have put forward various scenarios. “Any transaction, irrespective of structure, would represent a major reshaping of Temasek’s property portfolio,” says UBS.
