Knight Frank to Buy 55% Stake in AF Global

Knight Frank LLP, through its subsidiary Knight Frank Asia Pacific, on Wednesday said that it will buy the remaining 55% stake it does not own in Knight Frank Singapore from Singapore-listed AF Global for $28.47 million.

Confirming the deal, Singapore-based AF Global, in a bourse filing with Singapore Exchange (SGX) this morning, said that it was proposing to sell its shares in Knight Frank Pte Ltd (KFSG), which represent a 55% stake in the company.

The shares, which are held through its wholly-owned subsidiary Cheong Hock Chye & Co, will be sold to Knight Frank Asia Pacific, which holds the remaining 45% stake in KFSG, AF Global said in the filing.

AF Global has entered into a non-binding head of terms with Knight Frank, which grants exclusivity to the latter to conduct due diligence and to evaluate the sale. The deal is subject to the results of their due diligence being satisfactory, the company said. Knight Frank paid a $115,780 exclusivity fee pursuant to the head of terms.

KFSG is one of Singapore’s leading real estate consultancy firms. Its subsidiaries include Knight Frank Property & Facilities Management and KF Property Network.

Together, their full suite of services includes leasing, auctions, investment sales, retail planning and consultancy, office advisory, property asset management, valuation and consultancy and research, as well as a team that actively markets overseas developments.

Based on unaudited consolidated financial statements for the six months ended June 30, the book value and net tangible asset value of the sale shares is approximately $25.72 million. AF Global stands to recognise a gain of approximately $2.65 million on the proposed disposal, after netting costs and expenses.

In its SGX announcement, AF Global also said that the reason for the proposed disposal was to allow it to exit a legacy investment, which is not part of the group’s main business in hospitality. AF Global operates a hotel in Thailand and serviced residences in Vietnam and Laos.

“Furthermore, although AF Global indirectly holds a majority 55% interest in KFSG, the Group is not involved in the operations of KFSG Group, which are run separately and independently by their own management,” the company said.

AF Global Goes Private

The announcement by AF Global coincided with another proposal to take the company private as a consortium comprising Aspial and JK Global Investment, an entity owned by Fragrance Group, has sought to acquire all of AF Global’s shares at $0.085 cents per share via a scheme of arrangement. Should the scheme be approved, the consortium intends to delist AF Global.

AF Global too said that the proposed privatisation will allow the consortium and AF Global’s management more flexibility to manage its business and optimise capital resources without the costs and regulations that come with a listing on the SGX.

Aspial already owns 440.7 million shares or a 41.75% stake in AF Global, while Fragrance Group CEO Koh Wee Meng Koh owns 326.3 million shares, or 30.91% of AF Global.