Boustead Singapore

[weijian]

Boustead Projects’ 20 percent stake in Unified Industrial (UIB) unlocks a new capital-light income stream. Unlike rental income, which requires heavy ownership, UIB earns steady fees from managing assets for institutional investors. Fees are based on assets under management (AUM), so as AUM grows, income grows.

Today, UIB manages about S$4.7 billion in assets. That equals roughly S$47 million in fee income each year, with Boustead’s share at about S$9 to 10 million. If UIB doubles to S$10 billion AUM, fee income could be S$100 million, and Boustead’s share would then be about S$20 million. At S$15 billion AUM, Boustead’s cut could rise to S$30 million.

For shareholders, this is significant. Boustead’s core profits are around S$60 to 70 million. The UIB stake could lift earnings by 30 to 40 percent, making it a hidden growth engine that scales with investor demand.

Hi Curiousparty,

There are at least 2 things that are off the mark:

(1) The first obvious one is you calculated UIB's fee income and then probably used BSL's share to drop that straight into the latter's core profits. This only make sense if UIB has zero operating expenses. FYI, the asset manager has to pay many expenses, for example personnel, agent (look for tenant) and many other fund/company running expenses (trustee, legal, backend) from the fee income they received as an asset mgr.

(2) Next, you assumed that the mgr fee is ~1% of AUM. I take reference from the biggest listed real estate mgr in Spore Capitaland Investment and below is how CLI charges fee income:

Listed funds: ~0.5% of FUM + divestment/investment fees of 0.5% of asset
Private funds: ~0.3% of FUM + "carry" (one time performance fees) that are paid out when the fund liquidates and performance achieves > target IRR.

UIB is a private fund and so it will probably charge less than that of listed funds. That said, I can't prove that UIB isn't charging 1% although I don't expect it to. I could be wrong and will be more than happy to be proven so if you have facts that show otherwise.