Savills IM and Samsung Life for strategic investment alliance
Savills Investment Management has entered into an agreement to form a strategic investment alliance with Samsung Life, a Korean Life Insurer, and its real estate asset management subsidiary Samsung SRA.
As part of this agreement Samsung Life will acquire a minority interest in Savills IM Holdings Limited (Savills IM) and commit capital of USD1 billion to Savills IM's investment strategies over the initial four years of the relationship. The transaction, which is conditional on various regulatory approvals and other customary closing conditions, is expected to complete in Q4, 2021.
On completion of the transaction, Samsung Life will acquire an initial minority stake of 25 per cent in Savills IM for GBP63.75 million in cash, subject to completion adjustments. Under the agreement, Samsung Life has options to increase its interest in Savills IM by up to a further 10% over the Initial Term, depending upon the quantum and timing of the provision of capital to Savills IM's investment products, the maximum being achievable if at least USD2 billion of capital is committed.
Savills IM and Samsung Life will enter a Shareholders' Agreement which covers the working relationship between the parties. Amongst other things it provides customary minority protections to Samsung Life whilst maintaining the complete operational and investment autonomy with which Savills IM currently operates. The investment strategies for Samsung Life include both investment in existing recently launched products and seed capital for new funds. The products target Asia Pacific and Europe and include debt and equity strategies.
As part of the alliance, Savills IM will form a close working relationship with Samsung SRA which will seek to bring additional Korean client capital to Savills IM's products alongside the capital commitment of Samsung Life's and Savills IM's other investment clients.
For the year to 31 December 2020, Savills IM reported profit before tax of GBP14.9 million. On a proforma basis, including the full year effect of the recently announced acquisition of the remaining A member interests in DRC Capital LLP, 2020 reported profit before tax would have been GBP19.3 million. The gross assets that are the subject of this transaction amounted to GBP101.4 million as at 31 December 2020 (excluding the consolidation of DRC Capital LLP). The proceeds from the sale will be used by Savills plc for general corporate purposes.
Commenting on the Transaction, Alex Jeffrey, CEO of Savills Investment Management, says: "This transformational alliance will be unique in the industry, combining Savills IM's existing strengths as an investment manager with extensive local transaction and asset management capability in real estate debt and equity markets, with the strong capital support of Samsung Life. It will significantly enhance and accelerate our ability to provide attractive investment products for all our investment clients."
Mark Ridley, CEO of Savills plc, says: "Samsung Life is a long-standing client of Savills both in Korea and internationally and this transaction will allow the strengths of both Savills Group and Samsung Life to drive further growth in the Savills Investment Management platform."
Youngmuk Jeon, CEO of Samsung Life, says: "Samsung Life is excited to invest in Savills IM, one of Europe's leading real estate asset management platforms. We are confident that Savills IM is well positioned to help us expand our real estate investment network globally and that this strategic alliance, underpinned by our capital provision, will support and accelerate Savills IM's growth over the long term."
Bumchul Lim, CEO of Samsung SRA Asset Management, adds: "Samsung SRA is delighted to establish an alliance with Savills IM. It will strengthen our ability to provide attractive real estate investment opportunities at a time of heightened investor demand. With its 30-year track record, extensive network of 16 offices across 13 countries in Europe and Asia and broad product range, Savills IM is well positioned to address this market opportunity."