CapitaLand Investment Limited (CLI), a global leader in real asset management, has unveiled plans to significantly accelerate its geographical diversification, focusing on key markets across Asia-Pacific, Europe, and the United States. The company aims to double its funds under management (FUM) to S$200 billion and more than double its operating earnings to over S$1 billion by 2028-2030.

This ambitious strategy will be driven by a combination of organic expansion, mergers and acquisitions (M&A), and the strategic allocation of capital into sectors such as lodging, logistics, and data centers. As part of its growth roadmap, CLI has recently acquired a 40% stake in SC Capital Partners Group (SCCP) for S$280 million (US$214 million), marking its entry into the Japan REIT market and enhancing its presence in one of its focus markets.

Key Pillars of CLI’s Growth Strategy

1. Geographical Diversification

CLI’s expansion plans include strengthening its foothold in the Asia-Pacific region, particularly in Japan, South Korea, and Australia, while optimizing its China portfolio. The company is also actively exploring opportunities in developed markets such as the United States and Europe to achieve a balanced global presence.

India and Southeast Asia are key focus areas where CLI intends to rebalance its portfolio. In these high-growth markets, CLI is targeting sectors driven by urbanization and rising consumer spending.

2. Enhanced Fund Management Platform

A cornerstone of CLI’s strategy is the expansion of its fund management capabilities. The company plans to grow its REITs platform, accelerate private fund growth, and scale its lodging and commercial management businesses.

By 2028, CLI expects 60-70% of its operating earnings to come from its Fee Income-related Businesses (FRB), supported by a robust pipeline of new fund launches and acquisitions. Its recent investment in SCCP adds S$11 billion to its FUM, boosting CLI’s total to S$113 billion.

Capital Recycling and M&A

Since 2021, CLI has recycled S$24 billion across its portfolio, with approximately 75% redirected to private and publicly listed funds. Notably, S$11 billion has come from China, reflecting CLI’s commitment to optimizing its capital allocation in response to shifting market dynamics.

M&A remains a critical driver of CLI’s growth strategy. In Australia, CLI plans to invest up to A$1 billion (S$878 million) to grow its FUM. The company’s maiden Australian Credit Program (ACP), closed in September 2024 with A$265 million (S$240 million) in commitments, exemplifies CLI’s innovative approach to capital deployment.

Secular Trends Driving CLI’s Investments

CLI’s thematic-driven investment approach is anchored on three secular trends:

1. Demographics:
   • Increasing societal focus on healthspan and senior living presents significant opportunities in lodging, living, and wellness.
   • The global demand for income-focused financial products aligns with CLI’s REITs and core products.
2. Disruption:
   • Geopolitical and macroeconomic uncertainties have created openings in private credit and special opportunities.
   • Global supply chain re-mapping is fueling demand for logistics and self-storage assets.
3. Digitalization:
   • The exponential growth of generative AI and data storage is driving CLI’s expansion of its 27 data centers worldwide.
   • Investments in renewable energy are integral to CLI’s commitment to sustainable growth.

Strengthening Leadership and Talent

To support its ambitious growth, CLI is bolstering its leadership team. Two senior executives will join CLI’s Australia operations in 2025:

• Angelo Scasserra, as Chief Executive Officer, CLI Australia.
• Rahul Bharara, as Chief Investment Officer, CLI Australia.

These appointments reflect CLI’s commitment to attracting top talent and leveraging local expertise to drive growth in its focus markets.

A Sustainable Growth Vision

Sustainability remains at the heart of CLI’s strategy. The company is integrating environmental, social, and governance (ESG) principles across its portfolio, focusing on renewable energy and sustainable operations. CLI’s ongoing efforts to align its investments with global sustainability goals underscore its vision for long-term value creation.

Future Outlook

CapitaLand Investment is poised for transformative growth as it leverages its strong foundation in Asia-Pacific to expand globally. With its ambitious goals, strategic investments, and commitment to sustainability, CLI is well-positioned to become a leading asset-light real asset manager on the global stage.

Lee Chee Koon, Group CEO of CLI, summarized the company’s vision:
“CLI’s fund management platform is well-positioned for growth. Our foundation in Asia-Pacific has been laid, and we will drive further geographical diversification. As we pivot to become an asset-light global real asset manager, we remain focused on optimizing our balance sheet and building capabilities to scale our FUM globally.”

Conclusion

CapitaLand Investment’s multifaceted growth strategy, driven by geographic diversification, innovative investments, and thematic trends, positions the company to achieve its ambitious targets by the end of the decade. With its sights set on the future, CLI’s commitment to capital efficiency and sustainability will continue to define its trajectory in the global real asset management space.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

25th November, 2024