AF Global’s \$36.9M Knight Frank Stake Sale: What Investors Need to Know About This Major Transaction and Its Impact

Overview: Transformative Transaction for AF Global Limited

AF Global Limited (“AF Global” or “the Company”) has announced a landmark deal to dispose of its entire 55% stake in Knight Frank Pte Ltd (“KFSG”), Singapore’s leading real estate consultancy, to Knight Frank Asia Pacific Pte Ltd, a subsidiary of the global property giant Knight Frank LLP. The agreed consideration for the sale is an eye-catching S\$36,888,888.

Key Transaction Facts

• Stake Sold: 55% (550,000 shares) of KFSG, AF Global’s entire holding, via its wholly-owned subsidiary Cheong Hock Chye & Co. (Pte.) Ltd.
• Buyer: Knight Frank Asia Pacific Pte Ltd, already holding 45% of KFSG.
• Sale Price: S\$36,888,888, with no adjustments post-completion.
• Payment Structure: S\$150,000 exclusivity fee (already paid), S\$3,538,888.80 deposit (paid), and S\$33,199,999.20 payable at completion.
• Deal Completion: Subject to shareholder approval at an Extraordinary General Meeting (EGM), unless a waiver is granted by SGX-ST. Completion is expected shortly after approval or waiver.
• Non-compete Undertaking: AF Global agrees not to compete with or solicit business from KFSG for two years post-completion.
• Branding: AF Global must immediately cease using the “Knight Frank” brand and all related marks after completion.

Why Is AF Global Selling?

KFSG was a legacy investment from AF Global’s previous controlling shareholder, unrelated to its core hospitality business (hotels and serviced residences in Thailand, Vietnam, Laos). The sale allows AF Global to streamline its focus, exit a non-core asset, and monetize its investment at a premium to book value, strengthening its balance sheet. Importantly, AF Global has not been involved in KFSG’s day-to-day operations, which are independently managed.

Shareholder Impact: Major Transaction, EGM and Voting

• Major Transaction: The sale exceeds the 20% threshold on net profit and market capitalization under SGX Rule 1006, classifying it as a “major transaction”. Shareholder approval is required unless a waiver is granted.
• Voting Control: Aspial Corporation Limited and Mr Koh Wee Meng, together holding 72.6% voting rights, have pledged to vote in favor of the transaction. This virtually assures the deal will pass, barring unforeseen circumstances.
• Scheme of Arrangement: The sale is aligned with a proposed scheme to privatize AF Global. Proceeds from the sale will not be distributed immediately due to takeover code and scheme implementation agreement restrictions.
• Use of Proceeds: Net proceeds (after fees/expenses) will be used for general corporate purposes. If privatization fails, AF Global will reassess and update investors on capital deployment or dividends.

Financial Effects: Earnings, Book Value, NAV and NTA

• Book Value of Stake Sold: S\$33.3 million; Sale price is S\$3.6 million above book value, resulting in an estimated gain of S\$3.4 million after costs.
• Profit Impact: KFSG contributed S\$1.02 million net profit for 1H2025. Post-sale, AF Global will not recognize these profits.
• Pro Forma Earnings: The Company’s pro forma loss after tax shrinks from S\$2.65 million to just S\$62,000 for FY2024, and loss per share falls from 0.25 cents to 0.01 cents.
• Pro Forma NTA & NAV per Share: NTA per share rises from 14.43 cents to 14.76 cents; NAV per share also increases to 14.76 cents.
• Relative Figures: Sale value is 36.4% of AF Global’s recent market cap, and stake’s net profit is 21.17% of group net profits, highlighting the transaction’s materiality.

Other Material Terms and Risks

• Termination: If shareholder approval/Waiver is not obtained by 31 March 2026 (“Long Stop Date”), the deal can be terminated, with exclusivity fee and deposit refunded.
• No Director/Controlling Shareholder Conflict: Transaction is not an interested person transaction; directors/controlling shareholders have no material interest other than shareholdings.
• Inspection Rights: SPA is available for shareholder inspection at the Company’s office for 3 months post-announcement.

Potential Share Price Catalyst: Why This Matters for Investors

The sale is a major milestone for AF Global, leading to a significant cash infusion, a cleaner balance sheet, and a strategic exit from a non-core asset at a premium to book value. The removal of earnings from KFSG will impact future profit recognition, but the realized gain and increased NTA/NAV per share are positives. The deal’s linkage with a proposed privatization scheme may also be price sensitive, especially if the scheme is successful or fails, affecting future capital deployment or dividends. Investors should closely monitor updates regarding the Waiver, EGM, scheme completion, and use of proceeds, as these may materially impact AF Global’s share price and strategic direction.

Conclusion

AF Global’s disposal of its Knight Frank stake is a textbook example of a transformative, price-sensitive transaction. Investors should evaluate the implications for AF Global’s core business, capital structure, and future returns as the Company pivots away from legacy real estate interests toward its hospitality focus and potential privatization.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult their own advisors before making investment decisions. The views and analysis herein are based on public disclosures and may be subject to change as further information becomes available.

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