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Can Metro Holdings’ Latest European Investment Become Its Next Big Growth-Venture?

United Kingdom

Perhaps most known in Singapore for its Metro departmental stores, Metro Holdings (SGX: M01) is actually also a regional property owner and developer with significant investments in China and Japan along those lines.

Furthermore, it also has stakes in Top Spring International and Shui On Land, two of the leading property developers in China.

With its announcement yesterday, Metro Holdings is now moving beyond the shores of Asia. The company has decided to venture into Europe by acquiring a 25% stake in two pieces of land in Manchester, England from the Scarborough Group. The deal will cost the company a total of S$12.2 million.

The Scarborough Group has its roots as a UK-based property developer and investor. Today, it’s a bona-fide conglomerate with global business interests in real estate, retail, energy, finance, cosmetic products, medical services, and leisure.

Interestingly, Top Spring International, which is around 20%-owned by Metro Holdings, is also purchasing a 25% stake in the same plots of land under similar terms.

The first parcel of land has a land area of 23.6 acres  and is located in the western side of Manchester City; meanwhile, the second parcel of land has an area of 1.06 acres and is situated about 1.6 km away from the City of Manchester. The two plots of land have been zoned by the British government to be used mainly for residential projects.

Foolish Summary

Although this new investment by Metro Holdings is rather small for the company (it has total assets worth S$1.64 billion), it does hint to investors a possible shift in the direction the company’s moving toward in the future.

Aside from focusing on its property-related investments in Asia, this marks a new growth area for the company as it looks West to develop its land bank. With Top Spring International obtaining another 25% of the deal, Metro Holdings might be planning to lever its associate’s expertise in residential real estate to develop the land in Manchester. It is certainly interesting to watch how Metro Holdings will utilize the land in its first European venture.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.