CDL’s Kwek clan looks to invest US$3.9b in Singapore, China, Japan to raise confidence

City Developments Limited (CDL), a Singapore property group owned by a prominent local family, plans to allocate S$5 billion (US$3.9 billion) to investments in Singapore, China, and Japan by 2029. This move aims to bolster investor confidence following a family dispute within the clan. Additionally, CDL intends to dispose of S$6 billion worth of assets over the same timeframe, either through direct divestitures or by integrating suitable properties into managed entities.

To achieve this, the company plans to create a specialized fund management unit with a dedicated investment committee and leadership team. The goal is to more than double assets under management to S$10 billion by 2029, through the formation of new real estate investment trusts, funds, partnerships, and joint ventures. Following a legal conflict between chairman and eldest son, Kwek Leng Beng and CEO Sherman Kwek, the two have recently reached an amicable resolution.

Despite this, investor sentiment remains cautious, as CDL's shares have only increased by 3% this year, compared to a 23% rise in the Straits Times Index. The firm's debt-to-equity ratio, encompassing the fair value of its properties, stands at 75% as of the first half of this year. The management aims to reduce this ratio to around 55% by 2029.

Sherman Kwek has prioritized lowering CDL's financial leverage and is prepared to divest underperforming assets in markets such as China and the UK. The strategic review's recommendations have been under review, but the board unanimously approved the findings. The Kwek family holds a 49% stake in CDL, with the patriarch and his Malaysian cousin Quek Leng Chan collectively possessing a wealth of approximately US$25 billion, placing them among Asia's wealthiest dynasties.