Malaysia’s Largest Conglomerate Could Be Coming to Singapore via Saizen Real Estate Investment Trust

Bursa Malaysia, the Stock Exchange of Malaysia, is home to more than 1,000 companies. Many of them are conglomerates (a conglomerate is a company with multiple businesses under it) and one of the largest there would be Sime Darby Berhad (KLSE:4197.KL).

The company, with a RM52.0 billion (S$17.4 billion) market capitalisation, has a history dating all the way back to the times when Malaya was still ruled by colonial powers.

Today, the government-linked Sime Darby has businesses dealing with plantations, real estate, industrial equipment, automobiles, and even energy. It’s not just the variety of businesses that’s wide – Sime Darby’s business empire also stretches across the world, from plantations in Indonesia, to properties in Australia, to the distribution of industrial equipment in China.

Now, Sime Darby appears to want to make some moves in Singapore. Earlier this week, the company announced that it is planning a reverse takeover of Singapore-listed Saizen Real Estate Investment Trust (SGX: T8JU), a real estate investment trust that previously was focused on owning residential-related properties in Japan. Saizen REIT is currently a shell REIT after selling all of its assets in Japan earlier this year.

Sime Darby wants to sell its industrial properties in Australia to Saizen REIT and also acquire an 80% stake in the REIT’s manager. The deal will see Saizen REIT issuing new units of itself to Sime Darby as well. In addition, the REIT would then lease the Australian properties back to Sime Darby.

The reverse takeoer allows Sime Darby to monetize its properties and strengthen its balance sheet. It will also allow Singapore investors to gain access to another industrial REIT that’s heavily exposed to Australia. In June this year, Frasers Centrepoint Ltd (SGX: TQ5) spun off its industrial properties in Australia into the newly-created Frasers Logistics and Industrial Trust (SGX: BUOU); the REIT is the Singapore market’s first to focus on Australian industrial properties.

How would investors view Sime Darby’s plan? It is too early to tell. But this does mark the growing importance and attractiveness of Singapore as a REIT market.

Investors may want to note that the deal would require the approval of Saizen REIT’s unit holders, among other parties.

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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 shares in Frasers Centrepoint.