Samsung Life, the largest life insurance company in South Korea, has entered into an Investment alliance with Savills Investment Management that will commit US$1bn (€819m) to the real estate fund manager’s investment strategies over the next four years.

Samsung Life will take an initial 25 percent stake in Savills Investment Management for £64m, giving the transaction an enterprise value of £256m. It has the option to increase its interest by a further 10% if at least US$2bn is committed over time.

The South Korean group will use the money to invest in existing investment products and to seed new strategies across Europe and Asia.

As part of the alliance, Savills IM will form a close working relationship with Samsung SRA (the subsidiary real estate arm), which will seek to bring additional Korean client capital to Savills IM’s products alongside the capital commitment of Samsung Life’s and Savills IM’s other investment clients.

This deal shows the continual interest of Asian buyers in properties across Europe. Earlier, in 2018, the real estate arm of Samsung Life bought a London office building, 200 Aldersgate, for £320m. In 2019, Germany’s Aquila Capital entered into an alliance with the real estate division of Japan’s Daiwa Securities.

In December of 2020, Singapore’s Sun Venture paid £552m to the UK’s Land Securities for two buildings in the City of London.

Young-muk Jeon, chief executive of Samsung Life, said that the deal would “help us expand our real estate investment network globally . . . and accelerate Savills Investment Management’s growth over the long term”.  

For the year 2020, Savills IM reported profit before tax of £14.9 million. It has €21.2bn in assets under management and oversaw €2.5bn of transactions last year, according to a press statement.

Savills’ assets are much smaller compared to the big real estate players like Blackstone Axa and M&G. “The whole idea is that investment managers like Savills Investment Management take time to build up funds by attracting third-party capital,” said Chris Millington, analyst at Numis. “The magic ingredient is finding a group with a big balance sheet you have a relationship with who can seed and scale funds.” He added: “Once you reach scale it allows more inflows from other third parties because they’re not such a large portion of the mix.”

Commenting on the transaction, Alex Jeffrey, CEO of Savills Investment Management, said: “This transformational alliance will be unique in the industry, combining Savills IM’s existing strengths as an investment manager with extensive local transaction and asset management capability in real estate debt and equity markets, with the strong capital support of Samsung Life. It will significantly enhance and accelerate our ability to provide attractive investment products for all our investment clients.”

Samsung Life was advised by Fenchurch Advisory and EY.

Samsung Life has a crucial shareholding stake in Samsung Electronics and is an important asset for the Lee family that controls Samsung. But the future of the insurance arm is at stake. Following Lee’s death, the family faces a 60 percent inheritance tax bill on his $20 billion fortune. The payment plan includes hiving off non-core assets of the conglomerate.

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