SINGAPORE (Aug 6): Keppel Capital Ventures, the wholly-owned subsidiary of Keppel Capital Holdings, the asset management arm of Keppel Corp, has entered into a MOU with Vicinity Centres, a leading Australian retail property group listed on the Australian Securities Exchange, to establish a new private fund.

The proposed fund intends to invest in an initial A$1 billion ($1 billion) portfolio of Australian retail properties owned by Vicinity Centres.

The parties intend to manage the proposed fund through a joint venture where Keppel Capital and Vicinity will each hold a 50% stake.

Vicinity is expected to initially inject A$1 billion of retail assets located across five Australian states into the proposed fund, and continue to provide property and development services for these assets.

Each party is expected to initially hold up to a 10% equity interest in the proposed fund, which is targeted to close by the end of the first quarter in 2019.

The ongoing investment strategy of the proposed fund will be to own, acquire and grow a diversified portfolio of Australian retail assets with stable yields and potential long-term capital growth, underpinned by high occupancy rates, balanced lease expiries and a diversified tenant base predominantly focused on non-discretionary spending.

The proposed fund will benefit from Keppel Capital’s extensive investor network and Vicinity’s strong capabilities in the retail sector in Australia. As one of the largest retail property managers listed on the Australian Securities Exchange, Vicinity has a fully integrated asset management platform and A$26 billion in retail assets under management across 81 shopping centres.

Grant Kelley, Vicinity CEO and Managing Director, says, “Global investors view the Australian retail property market favourably, with our transparency, stable and growing economy, and strong population growth particularly attractive. Keppel Capital is an ideal partner for Vicinity, with our aligned objectives of expanding our respective property funds platforms and delivering long-term sustainable growth for partners invested in those platforms.”

Kelley was CEO of City Developments for more than three and a half years until last December to return home to Australia for personal reasons.

Shares in Keppel closed unchanged 4 cents lower at $6.73 on Friday.