ARA Asset Management to take a $518m tilt at Cromwell Property

The building at 100 Waymouth Street, Adelaide, owned by Cromwell Property Group.

ARA Asset Management is set to launch a $518m proportional takeover bid for Cromwell Property Group.

The company plans to buy 29 per cent of Cromwell for 90c per share, slightly higher than the last trading price of 87c per share.

ARA currently holds 24 per cent of Cromwell.

The offer values the company at $2.345bn.

Working on the bid for ARA are Moelis, Credit Suisse and law firm Arnold Bloch Leibler.

ARA currently has clearance from the Foreign Investment Review Board.

Private equity firm Warburg Pincus is now the largest shareholder in ARA with a 48 per cent stake.

“We believe this offer represents an opportunity for security holders to realise cash at a premium for a portion of their Cromwell securities amidst the heightened market volatility and uncertainty from COVID-19 and other factors” ARA said.

The offer is a 3.4 per cent premium to the last closing share price.

ARA plans to buy the 29 per cent in addition to its current holding.

However, ARA has another 2.7 per cent that it can buy on-market through creep provisions.

ARA says it intends to drive board change and renewal.

“A refreshed board with a clear proprietorial focus will bring necessary experience and provide appropriate oversight of Cromwell management, driving a clear and considered strategy and improved operational performance of the business,” ARA said.

The bid follows a prolonged battle between ARA and Cromwell where ARA has claimed concerns with Cromwell’s operating performance, strategy and governance and made efforts to assert more control through boardroom representation.

ARA is a global real assets funds manager headquartered in Singapore and operates across the Asia Pacific, North America and Europe, with over S$88bn of assets under management.

The bid is fully funded through a combination of its balance sheet and commitments from affiliates of certain shareholders, which include CK Asset Holdings, Straits Trading and Warburg Pincus.