Cordea Savills has significantly expanded its Asia footprint with the purchase of SEB Asset Management.
Along with tripling the real estate manager’s Asia AUM, the acquisition will also grow its geographic scope.
The priority for the newly-merged firm in the coming years will be on expanding into Australia and Singapore, the regional head of Cordea Savills told AsianInvestor.
The deal, announced yesterday, will see Cordea Savills buy SEB AM for ‘up to’ €21.5 million ($22.9 million) in cash, subject to regulatory approval.
Once the deal is completed, Cordea Savills will see its Asia AUM rise from S$1 billion to S$3 billion ($721 million to $2.1 billion), and the firm will be rebranded as Savills Investment Management.
Presently Cordea Savills’ Asia investment capability is solely focused on Japan, where the manager runs a value add fund, said Michael Flynn, the firm’s head of Southeast Asia and Australia.
The SEB AM acquisition adds real estate assets – owned on behalf of investors – in Australia, China, Japan, Malaysia and Singapore.
The plan is to on-board all of SEB AM’s seven Singapore-based staff, said Flynn, who added that the firm’s existing Asia headcount is made up of eight staff based in Tokyo, five in Singapore and one in Hong Kong.
In coming years, the investment focus is going to be on Australia and Singapore said Flynn, followed by China and Hong Kong.
That focus fits with surveys of real estate investor intentions released so far this year, which have highlighted a growing appetite for core real estate assets in Asia, which are more available in markets such as Australia and Singapore.
“It’s going to be really interesting over the next few years helping their European clients”, said Flynn, referring to SEB AM which has some 141 staff based in Frankfurt as well as the seven based in Singapore.
Flynn said that capital in Cordea Savills’ existing Asia investment management product was raised and invested in Asia. The SEB AM acquisition means that the investment manager can “now raise assets in Europe – and Germany in particular - to deploy in Asia”.
Flynn said that the aim was to “sensibly digest” the current acquisition but added that the strategic priority was continued growth whether that was achieved organically or by “selectively adding bolt-on acquisitions”.
A spokeswoman for SEB said that the asset manager’s AUM was “mostly from institutional investors”. She explained that the decision had been taken a few years ago to exit the real estate investment management business.
One of the SEB AM flagship products – a German real estate fund called SEB ImmoInvest – was closed for redemptions in May 2010 following dislocations to the markets in the wake of the global financial crisis. Since May 2012, the asset manager has been dissolving the fund by selling its properties, which were then valued at €6 billion.
“A conclusion was reached that it was better for someone else to manage the business,” said the SEB spokeswoman. Cordea Savills “will continue the wind down and liquidation of the [German] open-ended real estate mutual funds, amongst them SEB ImmoInvest,” said Fredrik Boheman, head of SEB Germany and chairman of SEB Asset Management.
Yesterday Cordea Savills’ parent company Savills also announced its annual results.
Those results showed a 52% and 8% growth in profit and revenue respectively for Cordea Savills’ investment management business, along with a 41% rise in global AUM to €7.2bn. The SEB AM acquisition will see Cordea Savills’ global AUM more than double to €17 billion.