Savills IM’s strategic investment alliance with South Korean life insurer Samsung Life and its asset management arm Samsung SRA will accelerate business growth and bring the platform to the next level, according to Alex Jeffrey, CEO of Savills Investment Management.
Speaking in the wake of the announcement on 27 May, he says: ‘Not only will this partnership give us access to the seed capital support of one of the largest institutions in Asia, it will also open up doors in the South Korean market and give us access to Samsung SRA’s relationships in the region.’
Under the deal, which is set to close in Q4, Samsung Life has committed $1 bn (€820 mln) of capital to Savills IM’s investment platform for the next four years and taken a minority stake of 25% in the business for £63.75 mln, with an option to boost its interest by up to 10% if it increases its equity commitments to at least $2 bn of capital.
The agreement follows around 18 months of discussions between the two parties after Samsung Life approached Savills IM in late 2019 as part of a strategy to diversify away from insurance and grow the real assets exposure of the group.
Jeffrey reveals: ‘We hadn’t thought about selling a strategic stake in the business at the beginning, but going forward with discussions we could see the merit of this proposition, particularly the access to more seed capital and the possibility to grow more rapidly.’
Jeffrey believes that the deal will be a ‘game changer’ for the business, while retaining the platform’s complete operational and investment autonomy. On the one hand, Savills will have quick access to capital to source seed portfolios for new investment strategies, while on the other it will be able to market its products to third party clients of Samsung SRA, the group’s asset management arm.
‘While we have been very successful in raising capital for our European funds, this will take our activities to the next level,’ Jeffrey says. In particular, he also feels that the deal will be a validation of the strength of the investment management platform for third party clients.
‘We believe that the amount of work that Samsung has done with the due diligence will validate our platform. Samsung Life is an institution with very high standards, they went through every aspect of our platform and I’m happy to say that we passed these standards with flying colours and this will give reassurance to other clients looking to invest with us,’ he says.
The two partners will be working to accelerate the development of some of Savills IM’s existing products, including a European senior debt fund with a core-plus risk profile, a Japanese residential investment strategy and a pan-Asian core-plus income and growth fund.
In addition, Savills IM and Samsung Life will explore the launch of new products across both equity and debt going forward, potentially focused on the logistics and residential sectors in Europe and in Asia. ‘Savills is extremely strong in residential, so we will be looking to build on that strength for our European business,’ Jeffrey comments.
