UPDATE 1-Singapore's Straits Trading buys $238 mln stake in real estate manager ARA
* Straits Trading buys 20.1 pct stake in ARA for S$294.4 million ($238 mln)
* Straits Trading, ARA's CEO commit S$950 mln to new property investment firm
* Deal to boost Straits Trading property business (Adds comments, details)
By Rujun Shen and Anshuman Daga
SINGAPORE, Oct 28 (Reuters) - Singapore conglomerate Straits Trading Company Ltd is buying just over a fifth of real estate fund manager ARA Asset Management Ltd in a S$294.4 million ($238 million) deal it said would boost its property business.
Straits Trading will acquire the 20.1 percent stake in ARA from Cheung Kong Investment Company, a unit of Hong Kong tycoon Li Ka-Shing's Cheung Kong Holdings Ltd, and ARA Chief Executive John Lim.
Lim and Straits Trading also committed S$950 million ($768 million) to set up a new joint property investment firm, the companies said in a statement.
"In order for us to compete with global players, we need strong financial support," Lim told Reuters after the deal was announced. ARA manages REITs with assets in Hong Kong, Singapore, Malaysia and mainland China.
Straits Trading said the deal will enable it to unlock value from its property business, which contributed 5 percent to its 2012 revenue.
Analysts the transaction could help both companies monetise their real estate portfolios.
"For Straits Trading, they might want to leverage on ARA's strength to manage their properties. They have the option to spin off some the assets into a REIT or a business trust in future," said Ng Kian Teck, deputy head of Singapore-based brokerage Voyage Research.
ARA has doubled the assets it manages from 2008 to a record high S$23.5 billion as of June 30. The company is among the top performing mid-cap stocks on the Singapore stock exchange so far this year, Thomson Reuters StarMine data shows.
After the transaction, Cheung Kong will own 7.84 percent of ARA, and Lim will hold 19.25 percent. ($1 = 1.2365 Singapore dollars) (Additional reporting by Eveline Danubrata and Kevin Lim; Editing by Rachel Armstrong and Miral Fahmy)
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