Is SingHaiyi Group Ltd’s Latest Partnership with ARA Asset Management Limited a Sign of Great Things to Come

SingHaiyi Group Ltd (SGX: 5H0), a property developer that gained prominence through a reverse-takeover of SingXpress Land Ltd back in 2013, announced yesterday evening that it will be entering into a partnership with ARA Asset Management Limited (SGX: D1R) in the latter’s latest private real estate investment fund. ARA Asset Management’s expertise lies in managing real estate investment trusts and private real estate funds.

SingHaiyi will be subscribing for a 25% interest in the ARA Harmony Fund III as a limited partner for a total sum of RM120.0 million (around S$45.0 million). The other limited partners in the fund include SingHaiyi’s main shareholders, Gordon Tang and Chen Huaidan; Tang and Chen have also collectively subscribed for a 25% stake in ARA Harmony Fund III for a sum of “approximately” S$45 million.

In conjunction with the investment made into the fund, SingHaiyi had also entered into a 35:75 joint venture with ARA Asset Management to obtain a stake in the manager of the ARA Harmony III Fund. In so doing, SingHaiyi will be a general partner in the fund.

Currently, the ARA Harmony Fund III owns commercial properties in Malaysia, mainly in Kuala Lumpur, Selangor, Ipoh, and Malacca.

The investment into the fund and the partnership with ARA Asset Management would not have any significant impact on SingHaiyi’s financials in the near future. But, it does show the company’s ambition in wanting to grow into an integrated property company with interests in property development, property investments, and property-funds management instead of its current status as a pure-play property development outfit.

There are no shortage of real estate companies with that kind of reach – CapitaLand Limited (SGX: C31) and Frasers Centrepoint Limited (SGX: TQ5) are two that come to mind, for instance – and these companies can serve as an indication of how SingHaiyi may look like in the future.

Foolish Summary

At the current moment, SingHaiyi is still a long, long way from being a fully integrated real estate company. Still, the partnership with ARA Asset Management can be a good learning platform for the firm and it would be interesting to see how SingHaiyi will make use of the new partnership to grow its business.

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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 writer Stanley Lim owns ARA Assets Management Ltd and Frasers Centrepoint Ltd.