CapitaLand, which is 52% owned by Singapore state investor Temasek, said it aims to achieve higher valuations for the investment management business which will no longer be hobbled by the intensive capital needs of development.
The restructuring comes after CapitaLand, which operates in Singapore, China, India and other markets, posted its biggest loss in 2020 due to the coronavirus pandemic.
"The overarching objective of the scheme is to sharpen the group's focus and position it to be an asset-light and capital-efficient business," CapitaLand said in a statement on Monday.
The new listed company, CapitaLand Investment Management (CLIM), will house its stakes in its real estate investment trusts, funds as well as its lodging business.
Brandon Lee, an analyst at Citi said in a note that early investor feedback was mixed, with questions around valuation multiples for CapitaLand's development business, valuation multiples for CLIM and the timing of the restructuring.
CLIM, which will be listed in Singapore, is expected to be Asia's largest real estate investment manager with assets under management of about S$115 billion ($86 billion), it added.
Shareholders will receive an implied consideration of S$4.102 per share in cash and scrip, including a one-for-one equivalent stake in CLIM. That is 24% above the last traded price of CapitaLand and implies a deal value of about S$21.3 billion ($15.9 billion).
The real estate development business will become part of CLA Real Estate Holdings, a Temasek unit. It will hold a 51.8% stake in CLIM and continue to develop projects for CLIM.
The deal is expected to be completed in or around the fourth quarter of 2021.
Trading in CapitaLand's shares and units of the REITs were halted and trading will resume on Tuesday.
Its Singapore-listed REITs are Ascott Residence Trust, CapitaLand Integrated Commercial Trust, Ascendas, CapitaLand China Trust and Ascendas India Trust.
CapitaLand had a market value of around $13 billion as of Friday's close. The REITs had a combined market value of $25 billion.
JP Morgan is advising CapitaLand and DBS Bank CLA Real Estate.
In 2019, CapitaLand completed an S$11 billion cash-and-stock deal to acquire Temasek's shares in Ascendas-Singbridge, which owned logistics and industrial assets.
($1 = 1.3422 Singapore dollars)
(Reporting by Aradhana Aravindan and Anshuman Daga; Editing by Muralikumar Anantharaman and Edwina Gibbs)
By Aradhana Aravindan and Anshuman Daga