I hear that, we have friends from Korea, do we? Oh, welcome. Japan? Australia? Yeah. So today we also have many of our colleagues whom we have flown in. Just wanted to get back to the theme for today. The theme for this year is Forging Ahead, and I think it couldn't be more fitting as we share our strategic road ahead for CLI. And you can see on the program sheet we do have a very packed day. We're going to share with you, you know, our growth plans and, more importantly, how all will stack up financially. And today is particularly exciting because in addition to our listed investor community, our financiers, we also, for the first time, have invited our limited partners to join us. So a very warm welcome to our capital partners to this event.
And we're looking forward to your questions later because today is not just about CLI. It's about what you want to see in us. So without further ado, let me invite our first speaker, Mr. Lee Chee Koon, our Group CEO. Please put your hands together.
Morning, everyone. Good to see such a huge turnout. And I must thank Grace for choosing this venue in Jewel. I took over as the CEO of CapitaLand Group in September 2018. Apart from the Ascendas-Singbridge merger, one of the biggest assignments was to get Jewel to open up in 2019. Open up with great fanfare, great crowd, great rental income. And the next thing we knew, COVID hit. You see the slides on the right-hand side. Many of you may not know, when COVID first started, there was a tremendous pressure from many of the retailers who are running the shop, asking for rebates, making sure that they could survive when there's no one visiting their shop, making sure that they can pay those rental income. So that was a difficult year. And it was also the year when we decided to restructure CapitaLand Group into CLI.
If you look at Jewel today, things are open up. I was here yesterday for the rehearsal. Big crowd. Things are back. Life is at least back to normal. I think many of us actually forgot what COVID means and what life was like during the COVID days where there were circuit breakers, when only allowed two persons to eat, four persons to eat. And the person that was designing the policy actually Gabriel Lim at that point in time, who was with the Ministry of Trade and Industry. Okay. But going into the presentation proper, when we restructured, there were a few things we wanted to do.
We wanted to, we restructured, created a company, asset manager focusing on growth, wanting to grow fee income, wanting to recycle our capital, and wanting to make sure that we focus in the first phase to build our capabilities in Asia Pacific before we consider, of course, U.S. and Europe. So that was how we started out. But I think many of you know better than us. During the last three years, the world has been quite complex. It's a general slowdown. We were hit by, I mean, the two issues that hit CLI the most was a rapid rise in terms of interest rates. The rise in terms of interest rates affect essentially the operating income from the properties. Point number one. Second point is the cap rates were expanded, affecting valuation, and of course, the challenge around China.
I think China, at the point of restructuring, the economy was still booming. There were two things that affected us from China. First, when we restructured the company, we had a great track record in China. We were hoping that China could provide the foundation for us to create a lot more private funds in the logistics space, in the business park space, and in asset classes that we were strong at. But, you know, obviously, what has happened in China made it a lot more challenging for us to execute that. Of course, the second thing that happened is the balance sheet that we have inherited in CLI today was the balance sheet from the original CapitaLand Group that has benefited from the growth in China, building up a huge NAV because of the year-on-year valuation adjustments from China that has served us very well in the old days.
But obviously, because of the slowdown in China, there are balance sheet challenges that we as a group need to deal with. So that's just the big picture. But even then, over the last three years, since 2021, I think we made creditable progress. We recycled a total of SGD 24 billion as a group from the balance sheet, from the funds, from the REITs, including SGD 11 billion in China. Some of you may not be familiar. In our China, led by the China team led by Tze Shyang. Tze Shyang, you want to stand up? Since 2021, Tze Shyang and his team have raised about SGD 50 billion worth of renminbi capital in China. Definitely amongst one of the biggest managers, I would say, to be able to raise huge domestic capital in China. And we believe that that's going to be the trend. It will be a lot more China for China.
Because many of the capital providers in China have faith in the track record, of course, there are challenges in China today. We are also careful in the way we deploy. But that's going to be the path or the course in terms of how we grow China. Apart from just the capital recycling, we have raised about SGD 17 billion of capital. Since SGD 8 billion in the listed funds and SGD 9 billion in the private funds. And FUM has grown. Of course, with the recent announcement in terms of the partnership with SC Capital, Suchad is here, that has helped us to increase our FUM quite significantly. So in the last three years, despite all the headwind, we spent a lot of time building our capabilities in Asia-Pac. So China, I think that's sorted.
We have problems to deal with, but we are confident that we should be able to continue to raise renminbi capital to help finance our growth and to drive our growth. Apart from that, India, the India team led by Sanjeev, we are amongst the leading players in data centers. I hope that we have more good news to share in the weeks to come with Sanjeev. So await for more announcements from him on India. There will be, we are also amongst the biggest in logistics, owner-operator in India, and of course, business parks. And we believe that we are at the tip of the growth trajectory in India. CapitaLand has been there for 30 years. Just a sharing in terms of track record. First 10 years, we were losing money from the Ascendas , and we were losing money. Second 10 years, we broke even.
The last, I would say the last seven years, the India team did very well, delivering double-digit ROE returns for India. I must congratulate Sanjeev and the team. Southeast Asia, we were previously just focusing on Singapore. Patricia, Patricia, you want to stand up? Created a few strategies. Logistics, modern logistics, raising capital to play in Southeast Asia. I think to capture the trend in terms of the supply chain readjustments and also building up and scaling up the business in self-storage. So essentially, I think we are laid enough foundation and with one or two more partnerships that we are pursuing. I think in terms of capabilities for Asia-Pac, we will be quite self-sufficient to grow and to raise enough money to support the growth in Asia-Pac. I forgot to mention, you know, we have been talking about private credit.
We built our own teams, did a private credit business, put things on the balance sheet, and of course, formed a very strong partnership with the teams from Wingate. Nick is here in Australia, originating deals, underwriting deals, and you know, I think there's a lot more pipeline in terms of what we could build, not just in Australia, but in broader Asia-Pacific, and that's a strategy that we are very dedicated that we believe we can build and we can, at the same time, use our balance sheet to apply to deliver higher returns. Just for your information, I mean, we put about SGD 300-SGD 400 million of loans on our books. They deliver about 12%-14%.
To be honest, I mean, at this point in time, we don't mind using more of our balance sheet to apply in a market like Australia because the returns are generally quite exciting. You know, all those, a lot of these properties are properties that we are familiar with and we are quite comfortable to support a lot more in terms of that growth. Quick summary in terms of our fund management platform today, listed side from the point of listing SGD 55 billion to SGD 69 billion, private SGD 32 billion to SGD 44 billion. Andrew will go through the big conviction strategies later during his presentation. Our growth target, where we are today, it's about SGD 100 billion. Our aim, as I've communicated earlier, is to go to SGD 200 billion. In the past, Singapore and China used to dominate the major parts of growth for CLI.
You will see us getting the growth a lot more from our other Asia-Pacific countries, India, Japan, Korea, Australia, and also Southeast Asia broadly. China, we believe long-term-wise, will still offer growth, but in the next few years, we believe that the growth will be more tepid because of the challenges that it needs to sort out and overcome. Okay. So what does it mean in terms of how we're going to achieve from SGD 100 billion to SGD 200 billion? Asia-Pac, we have built up the capabilities. I think we have enough products. Spending time talking to LPs, talking to investors, given the brand, the reputation that CapitaLand has built up in Asia-Pac, we are quite confident that we can raise enough capital from LPs to support our growth strategies in Asia-Pac. We are quite confident.
So the way that we really need to look at growth is to really look at the U.S. as a market. It's big. It is deep. I mean, we can leave the questions about the U.S., do we have a right to play, how are we going to win during the Q&A? But I think the U.S. is interesting for us. Are we going to build everything from scratch? We have a team there. But I think a more relevant way to look at the U.S. is the big asset managers today, the big ones. They are seeing the deals. They are raising 80%, 90% of the capital. But there are mid-size asset managers that are in need of looking for partnership in terms of strategic capital.
In terms, I think that's something that as a CLI, where we have the balance sheet, where we have the capital, this is something that we can provide. Can we take stakes in these particular platforms, help to bring in Asian capital that's also looking for investment opportunities in the U.S. and subsequently look for platforms that in the U.S. that have capabilities that can eventually be brought over to Asia-Pac? So that's how we think about the U.S. market. Balance sheet, I'll leave it to Paul to cover more later. And this is a slide. It's about, it's a slide without numbers, but it's probably the most important slide. To be an asset management company, it's really about people, about the culture. I was complaining and always lamenting with my team. We did a restructuring exercise.
We essentially tried to transform CapitaLand from a developer with a strong asset management capability to a pure asset manager. So there's a restructuring involved. There's a transformation involved. And the third part is building up like a startup in the private fund space. And we are doing this as a listed company. Most people do startups in the private space where there's no requirement to do a quarterly reporting. But that's the cuts that we have dealt with. And we believe in the private fund space. We believe that as long as we can build up a good team, find good deals, deliver good returns, raise money, build fee income, we think that is the proper way of building stronger enterprise value for our colleagues and also for our shareholders. Sorry, just on the people side, you know, as we build teams up, you may not get everything right.
We continue to adjust. We continue to tweak. We are prepared to make difficult decisions when it doesn't quite make sense. But fundamentally, the important thing is to make sure that you build a team that can deliver and a culture and a great culture that really focuses on making sure that whenever we look for deals, whenever we raise money, we want to make sure that we are doing everything, thinking on behalf of how to deliver high-quality, consistent returns for our LPs, for our unit holders, and for our shareholders. So we're going to do from SGD 100 billion to SGD 200 billion. Paul is going to share with you the details in terms of how the numbers will all stack up, what it means in terms of the profitability, what it means in terms of the balance sheet.
So Andrew will share more in terms of how we're going to execute and put everything together. I just got the timer reminder that my time is up. That's just the big picture. As a CLI, just a summary. We are positioning ourselves to grow. It takes time to build a fund management business. The foundation in Asia-Pac has been laid, and we are confident that Asia-Pac will deliver us the growth both organically and inorganically. What we need to prioritize is to look at the U.S. and Europe in a more dedicated fashion, which means that I'll be spending a lot more time in the U.S. Amongst all the investors here, I'm sure there'll be questions, there'll be disagreements in terms of how we look at the U.S.
But I hope that at least how I framed the issue would have explained to you how we are thinking about the U.S . as an opportunity for us. With that, thank you. I pass over to Grace.
Thank you so much, Chee Koon. We are honored to have the CLI Board of Directors join us for a panel discussion entitled Shaping CLI. The directors will share valuable insights into CLI's strategic position amid global challenges and discuss growth opportunities as well as potential risks. Let's welcome our panelists onto the stage. I'll ha nd it over to you, Ronald.
Thank you. Thank you. Good morning, everyone. I'm Ronald Ong, Chairman of Morgan Stanley, and very, very pleased to be here to moderate this panel.
Having come from Morgan Stanley Asia-Pacific Summit a couple of days ago, where we had about 4,000 investors, I can tell you that the common themes that I've heard were interesting times, plenty of growth opportunities. So with that, I think we've just heard from Chee Koon on CLI's strategy and plans going forward. And you know, I would like to take this opportunity maybe to kickstart this with the outline that Chee Koon had given, Miguel, Judy, and Gabriel. There seems to be strategic alternatives, not only growth, but geographical growth as well, capital optimization, capital recycling, which we all believe continue to be very important. So how would the board support management in their efforts in this regard? So maybe we'll start with Miguel.
Yeah, thank you, Ronald. Sitting here this morning and with the nice vortex as a backdrop, it brings me back some memory that about 13 years ago, I was standing right here. It was an open parking lot at Terminal 1, and I was just newly appointed as the selection committee for Changi Jewel Project to select the best design and best co-investor to join Changi Airport Group to build this. At the time, I had absolutely nothing to do with CapitaLand, so it was a totally independent decision. We picked out the three very worthwhile bidders, CapitaLand as our partner in CAG. This vortex design is one of a kind. It's the world's largest indoor vortex, actually. I think many of the tourists, passengers that have gone through this airport have a picture with this vortex in the background.
So sometimes you waited 13 years ago, and in a very circular world, I came back as the chairman of CapitaLand, which now I'm sitting on the other side of the joint venture. But indeed, it's a very rewarding and satisfying experience for me personally. But talking about CLI and our board, I think it's important to know that running a board is not as clinical and as clear-cut as many people put it. Indeed, we have some, what I call, the hygiene factor of three areas of responsibility. And that's really to safeguard the corporate governance and also to ensure that we are sound corporate strategy to go for the next three, five years. And thirdly, as Chee Koon said, people and organization culture are indeed really the secret sauce of any company to be successful.
So the board does oversee these three areas of important responsibility for us, and we don't take that for granted. But on top of that, there are many unspoken and unwritten rules about what we can do to enhance the working relationship and effectiveness, the board and the management, and as a result, CLI as a company. And these are things that we create a lot of unspoken chemistry we need to create with the management. We look upon ourselves, we have 10 very attentive directors who have done well in their career. That's why they make it to the board of CLI. So we have a lot to offer the management. But the ability for us to offer what we know to the management is not about endorsement approval and about if you come to us and if we don't agree, then you don't go ahead.
So we turn around, become really the advisor to the management of the company to allow them to want to voluntarily seek our advice whenever they need advice. And all 10 of us had our expertise, whether as a CEO of a bank, whether it's a private fund, public fund, public equity. And we also have market expertise in China, in India, and other markets as well. So that's how we make a board click. And we need to remember also, CLI as a group has six companies, listed companies below us in the REIT. And out of the six, two of them are STI component stock. There are 30 stocks in Singapore, and CLI Group has 10% of three companies in that STI component stocks, constituent stocks. So we really also set the tone for how board and governance are taken in the Singapore context as well.
work closely with SGX, with MAS in the case of the REIT. So I think the ability and appreciation that working with the management and in this CLI context is not just about having corporate governance to drive at the highest level. It's how to work with them and synchronize with them on a day-to-day basis and become an effective group of people who work to achieve our strategy, to run a world-class organization, and grow ourselves into that upper echelon of a fund management company in the world. So with that, I will just stop here. Thank you.
Thanks, Miguel. Judy.
Well, thank you and good morning, everybody. A real pleasure to be here. I've been on the board for the last three years, and I chair the ERCC, which is the Executive Resource and Compensation Committee, as well as a member of the Risk Committee.
So maybe I just talk a little bit about how I think about myself as a member of those committees. When it comes to risk management, I think the board's role is not just about mitigating, evaluating risks, right? It's really how we understand the risks and make trade-offs versus the opportunities that we work with the management to see how those opportunities can create long-term value. Of course, we have a very strong enterprise risk framework, as well as a lot of KRIs, key risk indicators, to make sure that we're moving in the right direction. But ultimately, it's the robust discussions we have at the Risk Committees, and we challenge the management team to think about not just the risk today, but the emerging risk. And if I just give an example, right?
Earlier, we heard from Chee Koon about our aspiration to really diversify into opportunities, be it geographically or really take advantage of the various mega trends that's going on in the world. A lot of those conversations really come from our understanding of the risk, our understanding of the macro picture going forward. So that's what all of us on the board really try to collaborate and have very open, very forward-looking discussion. As a chair of ERCC, we don't just look at compensation. Of course, rewards and compensations are super important. But earlier, Chee Koon also talked about culture. You know, I truly believe that culture eats strategy for breakfast. I really believe that, right? And this is still a people business. It's a knowledge-based business. Earlier, Chee Koon talked about our team, Tze Shyang, Patricia, Sanjeev.
And we continue to want to strengthen and grow our own timber, so to speak, really within the organization, identify high potentials, really give them the challenge to take the organization to the next level. At the same time, we also recognize that that's not enough. So the board and Miguel, myself, Gabriel, we spend a lot of time talking about talent because it is people's business. And Ley Hoon, of course, has been working really hard. And yesterday, if some of you read the news, we just made two really great appointments in Australia, Angelo and Rahul. And also, earlier last year, we identified a very strong CEO in Japan, Hideto. I don't know if Hideto is not here. Hello. He's a veteran in the real estate sector. So whilst we grow our own timber, we continue to attract great talent in Asia-Pacific and to strengthen our bench.
And we work very closely with the management on that.
Thanks. Thanks, Judy. Gabriel?
Yeah, thank you very much, Ronald. A very good morning to everyone here. Miguel and Judy have said quite a lot. I maybe just focus my comments on maybe board composition and board profile because until recently, I was chairing the Nominating Committee until I had to step off because of the change in my status to a non-independent director. I think the first thing you've noticed, if you look at the board composition today versus three years ago when CapitaLand was restructured into CLI and CLD. Actually the board has changed quite significantly. We have brought in five directors with financial services or PE backgrounds. You have Anthony, you have Judy, you have Belita, you have Helen, Farid.
We are going to appoint a few more with a sort of background to help to really provide a steer to management to compete and to do well in this, obviously, the new construct that is CLI. That's quite a significant difference from the board composition from pre-2021, when obviously the development role was much more prominent in the overall company strategy. From other sort of metrics, gender diversity, for example, we've also done a lot better. We now have three female directors on the board, and we're looking to appoint more. On top of that, we continue to supplement the board with directors with important skill sets, whether in sustainability, digital, organizational transformation, and so on and so forth, precisely to be able to support management in many of the themes that Chee Koon talked about in his presentation earlier.
So I think it's important when we talk about this because the board, the way we look at the board, it is almost both a coach and a colleague. A coach in the sense that you've got to work very carefully with management to set the strategy. You've got to hold management to account for their performance. But at the same time, also, you need to work very closely with them to deliver on our shared outcomes. And I think that so far, the board has gelled well, even though we have new board members. I mean, we operate very well as a team. And to Judy's point, I think the culture of cooperation, but yet respectful, challenging of management is there.
I want to commend Miguel for chairing the board in a very open, so a very inclusive manner because it's not easy to be able to have a board where everybody brings their different expertise together, but there's a certain unity of purpose where there's an ability to not just challenge management in terms of their strategies, but at the same time, also cheer them on in terms of getting things done. The board members, I want to say also what's critical if you look at our annual reports, incredibly committed to the cause. Many of our board members individually work with various senior management members to actually work through very specific work streams, whether it's evaluating a deal, whether it's working through organizational transformation efforts, whether it's sitting down to think about what is CapitaLand's investment for sustainability and reducing our carbon footprint.
Each of the board members are incredibly committed. We sit down, we devote our time and effort to this, really because we believe that the company is doing something that's worth fighting for. And I think along with that, continue. Thanks.
Thanks, Gabriel.
Thank you, panel. I guess there's been talk about the board's approach to helping management shape CLI going forward. And we just heard from Gabriel the term coach. It appears definitely that part of the shaping of CLI going forward is geographical diversification away from China. Not that China is not important. It is important, but we're talking about basically risk diversification and taking opportunities elsewhere, regionally or globally.
So if I can ask the board, and maybe we'll start with Gabriel, from a geographical perspective, the markets that Chee Koon mentioned, the U.S., Australia, India, would the board be able to give your perspective on this and how the board will support management in this regard?
Yeah, absolutely. One of the features of the points I mentioned earlier about the profile of the board is also that we have a board with a larger number of members who are overseas-based or with significant experience overseas. Helen and Judy are in Hong Kong. David Su, whom I forgot to mention earlier, is based in China. We have Farid in Malaysia, obviously having a very distinguished career in Maybank covering Southeast Asia. We have Anthony, who used to head up GIC Americas for a very long period of time.
And so my point is that we have, on top of that, Miguel, who has obviously had a very distinguished career also in many parts of the world, including the U.S. and Hong Kong. So my point is that there are in the board many members of the board who have very deep and long-standing expertise in respective markets and also in the specific slivers and the verticals that CLI is going to grow: financial services, for example, lodging, hospitality, and so on and so forth. So I think as far as geographical distribution is concerned, I think we're well placed. We can probably look to seeing how we can tap on expertise in, for example, some of the growth markets in India and Europe a bit more. But in the main, for the current board composition, I think we're in fairly good shape.
I think what is very helpful in particular is really working very closely with management and the team who has extremely good boots on the ground, who are able to not just understand the markets, but build the networks, build the relationships, and be able to deliver either co-investments or deliver partners like Suchad, who has been able to help us to diversify our portfolio and to allow us to build a much more resilient business going forward, so we're quite optimistic about that, Ronald. Thank you.
Judy?
Yeah, so going back to our discussion at the risk committee, one of the KRIs that we have in the risk committee is looking at how to ensure that we're not too concentrated in any particular market or any particular asset class, and we work very closely with the management to make sure that we look at those thresholds.
There's not a hard and fast rule, but we have to look at those thresholds together also with the opportunities. So that's the first thing is we do have thresholds or targeted thresholds in terms of how we want to look at our overall investments, our FUM, and our overall resource allocation, and we track that quite closely directionally. That's from a risk committee perspective. Earlier, I also talked about talent, right? If we are going into Australia, Japan, we have great internal talent, but we also need on-the-ground, right? This is a business where we really need to know the market. We need to know on the ground. While many of the directors do cover many of these markets, at the end of the day, ultimately, decisions, transactions, identifications, those opportunities are still we rely on our team.
This is where, again, we look at talent, very, very focused on that. If I think about our portfolio in CLI, I think we have the best of both worlds. Where earlier, Chee Koon talked about our 30 years in India. Not all 30 years are wonderful, but those lessons learned. The board continues to just look at those lessons learned. How do we continue to grow in India? In India, we're very optimistic about the opportunities there, be it business park, a data center. So we support the management's aspiration in countries, high-growth countries like India. Of course, in any of these emerging markets, the board also plays like a bad cop role, right? Have you thought of that? Try to also make sure that we've thought of all the risks.
If you look at Australia, Japan, Korea, these are very stable economies that we're expanding into, and there, I think we also are looking at great opportunities, so I guess what we're saying is the board is always challenging the management while making sure that we are working towards that diversification.
Thank you, Judy. Chairman?
I think the only thing I'll add to what Gabriel and Judy said is that this concept of the chairmanship here is a non-executive, but there's a term we also use internally quite a bit called an active non-executive chairman. It's a little bit of a contradiction in term. What that means is that there's a chairman. I do not work day-to-day and try to be over-managing the management team, but at the same time, I'm active.
I'm active in the sense that I try to be able to make myself available to management all the time. I just do not come to the board meetings. I keep an office there. I have a PA there, and I show up there almost every day. So that's how we work the board, getting ourselves very engaged with the business. And also want to make a point about we talk about the people and culture a bit. About five plus years ago now, when we merged with Ascendas-Singbridge, and I always joke about that I was one of the dowry. I was a Group CEO of Temasek ASB at the time and came in to CapitaLand as the Deputy Chairman and eventually be the Chairman. But it's really more a marriage of many fronts. In terms of market positioning, CapitaLand was very strong in Singapore and then China.
But Ascendas was the only real estate company that had been continuously operating in India and by now 30 years. So very strong in India and Singapore also. But they also are very strong in the industrial asset classes. We call it the new economy asset class in the old days. So CapitaLand is in retail, office, and residential in those days. So we also married the asset classes on top of the market. But additionally, which one piece that has been quite a bit overlooked is the people side. Sitting here today with the CapitaLand CLI management, there are a lot of Ascendas-Singbridge people who had joined the company. We don't talk about that that much now, but the management team had totally integrated. But CapitaLand also merging with Ascendas-Singbridge also brought in quite many very competent professional managers as well.
That really allowed CapitaLand to start looking at the CapitaLand ambition today by doing that deal. I think there are a lot of things that happened in the past that built the foundation for us in the future. Really hope that what we're doing today, all the things that Chee Koon talked about earlier, will also build our foundation for the next five years
Thank you, Miguel. Very interesting concept of active non-executive Chairman and Board. I'll pick up on that. As active non-executive Chairman and Board, with the plans that Chee Koon outlined, how do you measure performance? What KPIs do you use? Do you whip them? If so, how?
The interesting part about measuring KPI is that Chee Koon obviously laid out a very SGD 200 billion AUM in five years and all the financial metrics, which Paul is going to talk about a bit. Those are things that are considered measurable. But to get there, it's a lot of activities and a lot of good things that need to happen. So to me, it's really for us being active, it's measuring that on a regular basis of how things are progressing that may not translate immediately into numbers.
The board and my goal is to make sure that when we manage the business, we look at long-term sustainability, look at stickiness of the business, don't always go for the quick hit, and don't try to do any major short-term financial engineering that would help the company to look good in front of all of your analysts, but would hurt ourselves in the future or does not give us the optimal return as a company. Our goal is to really build a world-class asset management company that is not only good in Asia, but on a global basis as well. We have a large ambition. It's a long-term one. We want to make sure the board will always work with management to achieve that goal and no short-term hits, no short-term wins, and no trying to take shortcuts to get there.
And that's our role.
Right. Thanks, Miguel. Gabriel?
Yeah, thank you. Look, I mean, I think speaking to investors, you are more than familiar with the tangible metrics and KPIs: share price, AUM, IRR, ROE, and so on and so forth. And that's obviously important. We look at that all the time, and we hold management to account for all of those KPIs. But I'll just say two more things. As a board, first and foremost, we do care about the intangible aspects as well. We do care about employee engagement, which is why we invest a lot in organizational development and organizational health. We do care a lot about sustainability and our commitments to get to net zero, which is why we also track that very, very carefully.
And the reason why we care about these things is because at the end of the day, we believe that CapitaLand is here for the long term. It's not just about quarter-quarterly results. That's important, but it's not everything. We want to be here not just for the next quarter. We want to be here for the next quarter century and even longer. And so the longer-term plans, what you are trying to build towards, how you're holding the organization together, especially with the amount of M&As and sort of bolt-on acquisitions that we're thinking about for the long term, is absolutely critical because you want to be able to when you want to be around for a long time, you need the team to stay together. You need the board and management to have a good relationship.
You need to make sure your st ategy works in an environment that is by nature long gestation, long sort of duration sort of industry. So I just want to say that just to assure investors that we are very, very seized and very focused on the tangible aspects, the tangible metrics. But as a board, we also look very carefully at the intangibles and what is necessary to build a long-term successful company for the future.
The only thing I'll add is earlier, Chee Koon talked about the transformation from being a development company into ultimately investment management, private equity organization. It does require a change in mindset from using your money to invest most of it and then ultimately investing for your investors. So on the back of that, clearly there are things that we have to do differently in the organization.
I think under Chee Koon's leadership, we've been really focused on that growth mindset, the accountability that Gabriel talked about, ownership, and challenge. One of the challenges we have in many Asian organizations is, especially if you are more in the development culture, is that you don't challenge the status quo. And I'm very happy to see that earlier Gabriel talked about regularly we do employee survey. Year on year, we're seeing that changing, the culture of growth mindset, accountability, the culture of challenge. Because ultimately, that's what investors want the organization, the management to do. And we have to reflect that energy, reflect that culture. Secondly, I think as part of our growth, wealth through M&A, and the board discussed a lot as we looked through M&A, ultimately the discussion is not really, of course, on the wealth opportunity that transactions will bring to CLI.
But we actually spent a lot of time on how the culture of that organization can work complementary together. It doesn't have to be perfect. It doesn't have to be the same. But how do we complement each other? And actually, most of our discussions led by Miguel is on the culture complement, culture fit as we acquire. So as I said, culture is super important. I think the board really works closely to make sure that that is what is going to be our foundation as we grow into the next phase.
Thank you.
I just want to add to that, Ronald, if you don't mind. There actually is a couple of very large M&A that came our way in the last couple of years. And the board's reaction is always that whether there's a cultural fit between the principles of the two firms.
Very on-paper attractive M&A deal will dangle ahead because of that. I just want to make sure that we understand that culture piece is central to how we operate as an entity.
Thank you. We've heard from management. We've heard from the board. I think there's a very, very important group of people we've not heard from. These are our capital partners and investors. At this point in time, I'd like to open this discussion to Q&A from all of you. By show of hands and just identify yourself before you ask your questions. Thank you. A mic is coming your way. It's being passed from your left.
Good morning. Mervin from JPMorgan. Thanks for the opportunity to ask the esteemed board questions and to have worked with Miguel in the past.
I have full confidence that the CLI will eventually deliver with your stewardship. We have a lot of plans here today. If I also may add, an institutional survey, survey is open. Please do consider voting JPMorgan five stars as well. I know this is hosted by Morgan Stanley, but JPMorgan will be very highly competitive. And hopefully, this also translates to CapitaLand's culture as well.
We share a common name.
Yes. We share a common history as well. Maybe a question from my perspective. Obviously, we want CLI share price to do well, total return share price and dividends that's driven by financial performance. And we do want Temasek to make a lot of money. Otherwise, those of us living in Singapore have to pay higher taxes.
But in terms of the board and maybe Temasek, I mean, what's the three key things that you are looking at that you make management answerable or accountable to drive the FUM growth, the ROE? What are the three most important things that you want to focus on or assess management on? Thanks.
So we have three persons here. So I think it's only fair, again, in the democratic world that we each pick one. So prepare for the next two. So my first one, being only one, will be CLI actually has four verticals. And three of them are very stable and leaders in what they do. That is in commercial management, in the fund management. We're by far the largest in Singapore in terms of public fund management. And the thirdly is in lodging.
We have a leader in the residential space in the lodging, one of the largest, not the largest in the world, so those three, I think, that need to be a strategy of growth, but not try to retreat that overly to change the business model and all this, but that remains my number one important priority is the private fund. We demerge the company and put all the development business to our very kind and supportive major shareholder in Temasek to take over all that is to make ourselves asset light and be able to grow in a very fast speed the private fund business, so my number one priority will be for us in the next five years to demonstrate to the shareholders that we indeed can transform. We indeed can change the culture in the fund business.
We indeed can grow this private fund business in a large scale, not just large in terms of size, but also in quality as well. Growing the private fund business is by far my number one priority that the management put out for me many times already. I'll stop at that, Judy.
Look, there are leading indicators. They are, of course, the outcome of those indicators, which are the financial performance. We talk about ROE. We talk about FUM, which we've laid out very clear targets. As a board, we take a very long-term outlook. We do look quarter by quarter, half-year results to make sure that we are on track. If we said that we're going to raise X dollar in FUM capital raise, have we done it? If we didn't, why? To really understand what are the challenges.
So those are things that obviously we talk a lot about. Ultimately, I think what I look for, and we always do challenge the management team, is how do you differentiate? I mean, this is a hugely competitive market. And we have to continue to be the top players will obviously be able to raise the highest capital. And we are seeing globally, people are actually consolidating into the best players. So I think we do challenge the management team on our expertise. Whilst we want to play in Japan, we want to play in India, we want to go to Korea, we want to go to Australia. But what are we going to be best known for a little bit as what Miguel is saying? Whilst we want to be the number one private equity firm, but in what? And what are our differentiations?
And that we do. I think we discuss a lot. And that's what I challenge the management team quite a lot to make sure that if those are the areas we are playing in, we must be the best. And we must be very, very focused.
Yeah, thank you. So first and foremost, I want to state upfront that I speak as a CLI director rather than on behalf of Temasek. I've been on CLI board longer than I have been in Temasek. And I've seen CLI through the journey from the ASB merger and the restructuring all the way till today. I agree with Judy. I agree with Miguel. But I would say that if you're asking me to boil it down into one metric, I'll say stock price.
I'll say stock price because at the end of the day, as the ultimate outcome indicator, I do believe that that is the market's expression of confidence in the strategy and of the execution. As you know, a good stock price also helps significantly in many of our strategies, including with M&As in terms of share currency. And so if you were to really force it down into one KPI, it would be stock price. But I will caveat that by saying that I am a little bit less worried about day-to-day fluctuations of stock prices. I mean, there are many other stochastic idiosyncratic factors that can go into that. But over the long term, over quarters, certainly over years, it is a manifestation. It is a reflection of the market's collective view of how the company is going.
And we look at it quite carefully to understand what's underpinning that. Is it fundamentally a disagreement or a lack of confidence in strategy? Is it something where we can improve by way of comms? Or is that something that we are seeing some divergence between ourselves relative to our peers or relative to competitors? So I would say that to be, if you'd ask me for one KPI, that would be it. Thank you.
Thank you. Further questions?
Hi, morning. So this is Shen from Goldman. I have one question on the trade-off between diversification and also stretching yourself too thin. If you look at the best companies trading at the highest multiple, they do one thing and one thing really well. With that, you have scale, you have profitability that peers cannot match. What's the board's thoughts on that?
I think ultimately, as I said, the board has guided the management team to look at diversification. And we've set thresholds. Sure, you need scale in certain sectors and markets. But our view also is that given the macro environment, how do we build a portfolio that is resilient through the cycle? So those are the trade-offs we talk about. I don't know there's a hard and fast rule. I think CLI has been more concentrated than diversified. So right now, we're working towards actually creating more opportunities across more markets and sectors. And that would be what we're looking at. But eventually, clearly, in all those countries and sectors, we want to be number one. Or we want to be the top three.
Maybe I'll also defer to Miguel.
I was thinking the first question came from JPMorgan. That got to be a question from Goldman.
And sure enough, we get Goldman's question as the second question. Thank you for asking the question. My view is, and Judy alluded to it in the earlier answer, that we need to do things that we're good at. So this good at is, and that created a question about, do you focus or do you more go into trying new things all the time? And if you look at a company like Blackstone, if you look at them, and you can argue that they were very distracted in the early days when we were much smaller. But they were able to execute. So they have over a trillion AUM now. And they've done things generally very well. They had made mistakes. They had certain failed attempts to do things. They had to hand the keys back to the banks from time to time.
But you know that they do try and they do fail as well. So the way we look at it, we have over SGD 100 billion AUM now, Sing dollar. And our ambition to be 200. I don't believe that we can do everything. We need to really have a very stringent approach to what we call the gate to unleash this approval to get into new market or new asset class, new product. But at the same time, we also got to allow management team to try new things. If we don't allow them to try new things, but that try new thing is not like a drunken sailor wake up in the morning and say, "I should get into this asset class or this market." You really have a very well thought out approach to sanitize, to scrutinize whether we should get into that new market.
That is a fine balance. On one hand, management and some of the younger generation are very resourceful in new ideas. But we don't want to, because I'm the oldest man in the room usually, cannot say, "I've seen that movie before. It doesn't work." Every good movie can have a different ending. So I'm very conscious of that. So not try to say, "I've seen that movie before." And that's a killer statement by itself also. So finding that right balance, I'm not answering your question, but giving my view that trying to find a balance between allowing management to take chances to build new businesses and to do new acquisition, new M&A versus that they are going too far from the adjacency and all this. I think it's a fine art. It's an art rather than something that's clear cut that should or should not be done.
But the process through regular engagement. Chee Koon would come to my office from time to time and throw out these crazy ideas. And that's his job to have crazy ideas. And then I'll give him, "Have you thought of that? Have you thought of that?" But very seldom I said, "Don't go there. I've seen that movie before."
Yeah. Maybe just to add, as a conceptual sort of high-level statement, it's very difficult to disagree. Yes, you can be overly diversified and stretched too thin. But you could also be incredibly concentrated and be at risk of a significant disruption. And we've seen countless examples of that across the corporate landscape. I think for us, I want to echo what Miguel and Judy said. I think what matters is the ability to execute and the ability to win in their respective market.
And I think the key to that is a few things. One, being incredibly disciplined about evaluating management performance on the ground, operational performance. If you're building a business and you're top two, top three in a market, I think you have a chance to succeed. And they have done that. Conversely, if you're going to a new business and you are not moving anywhere, I think it is the onus of us and of management to basically say, "This is it. We need to exit. And we need to pivot. And we need to redeploy that capital into something where we can dominate and build a good business out of." And to be fair to management, they've done that.
If you look at the statistics that Chee Koon presented about the quality and the extent of capital recycling, a lot of it has been pivoting out of businesses where we think we can't dominate or win anymore and redeploying that into areas where we can actually do good. So for example, Sanjeev, Mano, India data centers, there's actually a very exciting business there. We would like to, I think there was a hint of that in Chee Koon's presentation. But we're hoping to convey more good news to the market in a couple of weeks or months. And we think that there's something that can be the nucleus around which we build out what was really originated with Ascendas-Singbridge business in India over the last 30 years.
So I think going forward, I think the main thing for us is to make sure that we stay disciplined, stay humble also to understand where our competitive advantage and positioning is, and be incredibly disciplined about making sure we are deploying capital to the areas that give us the highest return.
Thank you.
Choi from HSBC. Maybe I'll just follow up on Miguel. You mentioned about private equity growth. If we look at the risk-reward from private capital versus REIT, that's been actually quite different. Have we seen board changing this risk-reward sort of framework when it comes to evaluating deals? And how do you look at return on those versus public capital?
Absolutely. This is front and center. How are we going to revamp the way you look at private equity?
Clearly, you cannot look at the people who are running private equity the same as the public equity. It's vastly different business. One is the core business, at most the core plus. The other is mostly on the more opportunistic space and all this. So clearly, that needs to be done. So I want to direct your question to our good lady who's chairing ERCC because there's a whole load of work that's being done on how we are going to risk and reward the private equity people. Because that is really essential, how we can run a successful private equity business.
Well, if I look at how we reward and recognize our teams, the senior teams have always linked their compensation to align with what Gabriel talked about, the return, the ROE, long-term performance of the company. And a big part of the compensation is deferred.
As we get into private equity, clearly, a co-investment scheme is super important. How do we make sure that the teams, how they're rewarded is fully aligned with the performance of the fund? And we absolutely want to recognize people that can deliver that outperformance. I think in terms of your question around how we assess these transactions versus maybe the public funds, ultimately, it still comes down to the fundamentals of those businesses, the opportunity of those businesses in the long run. Clearly, in the private equity space, we take even a longer-term perspective. And most of it is close-ended. So we do take a much longer-term kind of perspective as we assess those products versus some of the more public-listed funds.
But I think the key point to what Miguel said is we want to make sure that our teams who are identifying those transactions, who are managing those transactions, their rewards and recognitions are fully aligned to the performance of the fund.
Thank you, Judy. More questions? At the end, I think that's.
Hi, Vijay from RHB. I just have two questions. My first question is in terms of the theme of the conference was a little bit about diversification into new markets, especially a focus a bit more on Australia. I think not long ago, CapitaLand had a big platform called Australand in Australia, which you diversified and allocated a bit more of capital towards China. Now the theme seems to have reversed a bit that you are building a bit more of platform again in Australia and diversification. So what changed?
Probably, how would you explain this to investors? Renewed focus on diversification. And my second question is on a lot of discussion centered on culture, cultural fit, and people of CapitaLand Investment. Maybe can you just synthesize and explain a bit more to investors in terms of what exactly does it mean for CLI? And how does it differentiate from other asset managers who have a similar kind of theme for their people and organization? Thanks.
The Australand was done maybe over 10 years ago. I try to remember because I was not with the group at the time. But from what I understand of why the decision was made, at the time, China was booming at double-digit growth. And indeed, that CapitaLand has a huge competitive advantage over a lot of foreign competitors, at least, and most of the local competitors.
They thought if they could divert more of their capital and balance sheet onto China, they can yield higher return because the CapitaLand commercial side was growing very fast. CapitaLand had one of the most enviable shopping or retail businesses in China through the Raffles City and other malls. I understand that was how the decision was made. I'm not echoing whether it's right or wrong. I'm just looking from afar. Remember, I mentioned at the beginning, I was standing on this public parking lot trying to select who was going to run this at the time. I was really totally from outside the scene. That was how the decision was made. I think you could argue that it's right or wrong. We did not have the crystal ball, of course, about China's situation today.
So that could have been a major win by deepening our presence in China. Or that could be a wrong move because what China is today in terms of macroeconomics. So I just answer you at that without committing to comment whether my predecessors, the management team or the board had made a right or wrong decision. So I want to emphasize that point. And the second question is about, okay, I think we run a company with four verticals. And the four verticals have different success factors. In the lodging business, it's very much B2C. The success is determined by the guests who stay in the hotel. So the culture of that or the way that the critical success factor of the staff and the management are quite different from in the private equity space, the other extreme, where we're dealing mostly with the product, the LPs, et cetera.
The success factor dealing with a smaller group of people, they're looking, the money manager looking for return. I think the important thing about CLI is how do we be able to harness the four different verticals and create a successful ecosystem. The success factors are different. It's the value of the company. Chee Koon talked about quite a lot to the staff about the value of the company, about working together as a team, being able to always do the right things, and being able to win through cooperation, through teamwork, and through hiring the best, through rewarding appropriately according to your business. Those do not change. I don't think we want to bond everyone together by saying that you have to have the same strength about deal analysis, about treating the guests.
But we do require all our associates, all employees, to really understand this very intrinsic value of CapitaLand, of being able to work together, be motivated, to work as a team, take the extra steps, and all these important steps to take. So I want to see if my other two directors have anything to add on top of that. Yeah, please, Gabriel.
Thanks, Miguel. Just a quick one about culture. Everybody talks culture, but not everybody lives culture. And I think one of the very, very useful barometers of culture and how it defines an organization is what happens during tough times. Not what happens during good times, because it's very easy to talk about it. But what happens during tough times? And I mean, obviously, CapitaLand has been seeing some challenging times.
But at this point in time, right in front of you, everyone in the front row, Chee Koon, Andrew, Paul. I'm looking around, Janine, Ley Hoon, Mano, Kevin, Erwin, Vince. They're all looking there. And they're here. They're here. They're determined to basically grow the company. They're determined to increase the stock price. They're determined to grow the private equity, real assets business, lodging business, and the REITs business, and so on and so forth. And they're all committed to this. And I think that's what defines a good organization. That's what defines organizations of great culture. And that's why it goes back to what I said earlier, that CapitaLand is in for the long haul. We're in to succeed. We're in to excel. And I mean, we're fully determined to make that work. Thanks.
Thank you, Gabriel. I don't think we've got any more time for Q&A.
I'm just going to do a quick wrap-up. We've heard from management. We've heard from the board on their perspectives of key ingredients going forward to shaping CLI, whether it's global diversification, product diversification, capital resilience, recycling capital. I think these are all very important themes to take CLI to the next level. So with that, just a very quick question to anyone on the board. Five years from now, what headlines would you like to see CLI make?
I think how journalists like to write about us is their own discretion, but in five years from now, I'm looking forward for CLI not just achieving all the KPIs the management has committed, but also build an organization that is enviable, that the people who join this company will want to stay or want to be part of, and then, importantly, we'll be a global organization.
We're not a Singapore-led company. Lee Chee Koon said many times, we could be headquartered in Singapore. We could be headquartered anywhere because we're just a global asset management company. That's what I like the company to be. Because just thinking about we are Singapore growing out overseas, we need to be thinking of ourselves in five years' time as a global company that so happens has a headquarters in Singapore or elsewhere.
Right. Thank you. Right. Thank you, panel .
Thank you so much to our board, Miguel, Judy, and Gabriel . And thank you very much to Ronald as well. Thank you.
Morning, everyone. Lovely to see all of you here. Before I start the presentation, I've got 10 quick slides. I just wanted to address a little bit about what Shen asked about diversification because we get this question a lot.
I think one of the questions that we often get asked about, also at the board level, is, are you guys doing too much too soon and spreading yourselves too thin? Should you not specialize in certain things? And I think the way we look at that is the way the board addressed it. If you look at the best-in-class capital managers, they actually do much more than what we do. They are diversified across products. They are diversified across sectors. They are even diversified across strategies. So the biggest boys have actually successfully built different product streams. And in the course of doing so, built resilience into cycles, real estate cycles, capital cycles, and so on and so forth. So I'd like to say that we are on that same path. We aspire to have the same degree of resilience.
But as the board has guided and cautioned us, you have to do that judiciously, carefully, and not try and be all things to all people at the same time. So it is indeed a careful balance that we have to strike. And if you feel that we are pushing too many buttons at the same time, we welcome that. Let us know and challenge us to prove to you that we're not doing that. Thank you. Okay. So I'm going to talk about how we are positioned for growth leading on from Chee Koon's opening. I'll take a couple of slides just to remind everyone what we have accomplished since we sat down together two years ago at the 2022 Investor Day. And I'll do that using the four verticals. First off, private and listed funds management, including the important announcement with SC two days ago.
We have now grown funds under management by 30% to SGD 113 billion on a fully embedded basis. In the last close to three years, we have raised SGD 11 billion in equity, both from our listed and private funds, and FRE has grown by 7% over that period of time. You may ask us why the FRE is slower than the funds under management, and I think I would point you to the forward-looking metric of embedded FUM, committed FUM that will deliver future FRE, so if anything, this is a forward indicator of the future earnings and fee income that will drive once that capital that we have raised begins to get deployed and starts to generate fee income, so from a private and listed funds management, I actually think we've done pretty well.
Turning over to our operating platforms, lodging management has recovered strongly from the challenges posed by COVID. FRE up almost 100% since 2021, and Kevin and his team have been busy signing units, but also, equally important, opening new units, delivering resilient and stable FRE. As you know, these contracts are typically five to 10 years in nature. Revenue per available unit has increased by almost 50%. We are committing more than SGD 150 million to continuing to renew the portfolio to ensure that the product is safe and delivers the value for our travelers. The confidence in lodging management has been crystallized by Kevin having the ability to come out to say that we are now doubling our revenue targets from SGD 250 million to SGD 500 million by 2028. That is no mean feat to deliver.
But that indicates that the confidence we have, as Miguel said, in our global operating lodging and living platform. As a key enabler, commercial management is picking up its share, delivering growth of 19% in fees earned. We are the largest commercial landlord in Singapore. We are the largest foreign institutional commercial landlord in China. That gives us scale, gives us network advantages in growing our platform in an asset-light, ROE-efficient way. So I just want to start off this next chapter of what I'm supposed to talk about, which is how we are going to grow going forward, by just reminding you guys that as far as our four key income verticals are concerned, despite the difficulties we've had, despite the headwinds, COVID, inflation, geopolitics, I would like to think that we've actually delivered credible growth across all of our key four verticals.
And if Gabriel's point about TSR holds true, we fundamentally believe that the stock price is undervalued, which is why Paul has been buying back shares at a healthy clip. Okay. So let's stop there and then turn the page to what we want to do going forward, which is why all of you are here. There are three primary growth drivers that I would like to touch on today. The first of these is investment thematics and strategies. Now, Chee Koon talked a bit about this. And when we sat down in 2022, we talked about seven megatrends. I have distilled this into three Ds: demographics, disruption, and digitalization. They should come as no surprise to you. This is not proprietary to CapitaLand. Many capital managers have similar forms because I think we see the same secular trends, investable themes that many other investors and capital managers see.
In demographics, it's about how Asia is aging, how we are increasingly focused on our health span rather than lifespan, and as we get older, the shift towards income-focused products will continue to grow. What does that mean for us in terms of demographics? We are investing into the lodging and living sectors. We are investing into wellness, and of course, we have our REITs that generate stable, predictable yield and DPU growth that is testimony to our ability to do so. Second D is disruption. Disruption stems from all manner of VUCA causes over the last three years: inflation, geopolitics, climate change, et cetera, et cetera, and one of the manifestations is that we had to reprice capital costs substantially, both on the debt side but also on the equity side. Disruption from geopolitics and the need to reshore, friendshore has also forced supply chains to be rewired, remapped.
As a result of that, we are investing heavily into strategies such as private credit, special situations, and logistics in self-storage. Last but not least, certainly, as Gabriel mentioned, digitalization is a fundamental driver. There will be exponential growth, we believe, in data storage requirements, whether for AI or conventional storage. We are investing heavily into our data centers and renewables platform. Now, I just want to ask you to focus on the right-hand side and just to remind you and show you that within these strategies, we cover the entire return spectrum. If you look at our REITs and our core products, these are designed to give you steady DPU yields, distribution yields, but also with products like COREF, a return of, say, 8%-10%.
On the other end of the spectrum, recognizing that there's disruption and a desire for higher return, we have our special situations as well as our opportunistic products. These are designed to earn upwards of 18%. And then the strategies in the middle, which are thematic in nature, are designed to deliver more value-added returns of between 12%-18%. So one way to think about this is, well, you guys are doing everything. The other way to think about this is we offer a diversified product suite across our private and product funds and public funds that give people the ability to choose and decide what it is that suits their risk and return depending on where they are. And also, it gives them the ability to pick from these emerging trends, investable trends, but what it is that appeals to them.
I'm going to take the next five minutes to talk about three of these trends. We believe in these trends with high conviction, one each: demographics, digitalization, and disruption. The first of these is lodging and living. We have an aging population in Asia. One in six people will be over 60 years old by 2050. I will certainly be one of them. We debated long and hard about what bleisure means or bleisure. And essentially, it is business and leisure coming together as one. I, for one, increasingly use this when I travel for business. I tack on another three to four days at the end of it and spend my time in the hotel exploring wherever I am. And so this is a huge market.
It allows us to leverage the product and the operating platform that we have through Ascott to deliver platforms and products that suit folks who want to engage in bleisure travel, experiential lifestyle, sustainability, and wellness. These are important trends that we are seeing and we believe we can invest into. We currently manage SGD 17 billion today across two of our listed funds, including our strategic partnership with Suchad and his team in Japan, which we believe is incredibly strategic from a lodging standpoint and also from a Japan trend standpoint. We have three dedicated private funds that invest into this. What are our strategic differentiators, as Judy talked about earlier? What is it that we have and possess that allows us to believe with confidence that we can win? This starts and ends with Ascott.
We are arguably the largest long-stay, flexi-stay platform in the world. We have a diverse set of brands and are adding more every day that caters to the preferences of a diverse travel set. And the loyalty program that Ascott has built is starting to really gain momentum in driving EBITDA margin growth as we start to cut out middlemen from platforms and agents that charge high middleman fees. So this gives us high conviction that lifestyle and lodging is indeed a thematic that we can play in and we have a right to win in. The next one of these in disruption is logistics. I talked about that earlier. We've got supply chains, friendshoring, nearshoring. This is a real trend that is happening. All of us in our respective countries and markets are seeing evidence of this.
Unfortunately, it's actually manifesting itself in higher inflation because reprogramming of supply chains is inherently inefficient. Technological disruptions are driving the need for last-mile delivery, hubbing, analytics, robotics, and so on and so forth, and you can see from the chart on the right that the global logistics market size is growing and growing twice as fast in Asia compared to the rest of the world. So we believe that this pie is growing and we have the ability to invest into this growing piece of the pie and deliver value. We've got SGD 11 billion in funds under management today. Four of our trusts invest in logistics properties, and we have a number of dedicated private funds in Japan, in India, now in Southeast Asia, in Korea, all of our core markets that deliver customized logistics product differentiation. What are our strategic differentiators?
We offer innovative products from smart logistics, automation, analytics, and flexible cost solutions, as I mentioned. We have two very value-adding partnerships. I'll talk a little bit about platforms in a minute. Through Ascendas-Firstspace, which is a joint venture we set up in India many years ago and has culminated in us being a top three logistics player in India today, and more recently, through the SEA Logistics Fund, we have a strategic partner in Ally Logistic Property out of Taiwan that allows us to design a highly compelling product in the use of smart and automated logistics that is now taking shape in Thailand, Malaysia, and now they are venturing off into North Asia, Japan, and Korea. The third of these is data centers and building on the theme of digitalization. What's the industrial logic? The industrial logic is that global DC capacity demand is exponentially growing.
And again, when you look at what Asia is promising to deliver, a more than 20% growth in co-location market size in the next five years. So similar to logistics, you may argue that there's so many players. It's getting crowded. Everyone wants to play. But the pie is big enough, I think, with the rate of growth, that if you have the right capabilities, you have the right access to location, and you have the access power, you can play and play successfully. And we believe we are one such entity. We've got SGD 6 billion thus far in assets under management, a number of dedicated private funds, two of our REITs investing in DCs, and we are currently on the road marketing two additional DC funds within Asia. What is our strategic differentiator?
A little known fact for many of you is that we actually now have 27 data centers across our global footprint with over 800 megawatts of power on a fully developed basis. We have a complete in-house team able to design, develop, lease, cater to co-location, cater to hyperscale and enterprise solutions. And we are currently building a renewable energy expertise because we believe that this will be highly complementary to any DC product that's out there. The second of these key drivers is our operating platforms. Now, what we believe operating platforms offer is a value-enhancing proposition that drives the value of the real estate. And this is especially true when you're dealing with operationally intensive and complex sectors.
Again, this may be not well known to you all, so I hope this gives you some sense of the ability that we have to partner with best-in-class operators to deliver value-enhancing propositions. In lodging, we have our Ascott platform encompassing all of its brands. We recently signed a strategic partnership with Jin Jiang in China to grow the Quest brand on a franchise basis. In wellness, we have the Pruksa Group out of Thailand and their ViMUT brand of hospitals. C-WELL is investing into an orthopedic hospital in Bangkok. We are product and operator agnostic in the C-WELL Fund. And so look for us to partner with more best-in-class operators as we develop this very interesting and fascinating thematic. In self-storage, we've invested into Extra Space, which is active across six countries. And this is a Pan-Asian strategy that we've invested into with APG.
Industrial and logistics, we have, again, as I mentioned, two key partners, Ascendas-Firstspace in India, as well as ALP in Southeast Asia. And then two very important and strategic in-house platforms that we have grown from the ground up in our data center operating platform and our incredibly successful commercial management platform in China and in Singapore. You may notice that there's a work in progress sticker under private credit, and that is there for a reason. I will stop. But I just want to leave you with this: that a key component of why we think we can succeed is that we believe that in the sectors and thematics that we have highlighted, they are operationally intensive, highly competitive. You need to know what you're doing in order to drive the best value out of your assets. And this is where the platforms come in.
So if you question us on our right to win and our right to play, this is where I will point you to, alongside the fact that we have the products and the capital that we are raising to deploy into these strategies. The third driver is simply the fact that we are Asia-Pacific's largest REIT platform. Now, again, that is something that we never take for granted for one second. How, through the family of our six in-house REITs and now together with SC Capital's Japan Hotel REIT, second largest J-REIT, Hospitality J-REIT in Japan, with a fantastic track record, we are signaling that we have the ability to roll out a Pan-Asia platform of perpetual capital catering to a very specific capital pool that is targeting yield return. We are now active in three markets: Singapore, Malaysia, and now with SC Capital, Japan.
We want to do more. We see the potential to do more. We think the REIT market has room to grow. We are SGD 300 billion now. We think that the market has room to grow 8% per annum for the next five years. This is a pie that is growing across Asia. I don't think we should be limited to the S-REIT market. In fact, I believe the S-REIT market is pretty crowded. We have the opportunity to take the product and our reputation and our sponsorship and our high governance into markets such as Australia, China, and even India. This is, I think, a sleeping giant that we have, a crown jewel of our business that has a tremendous potential to add to our growth story on the public fund side of the business. Okay, how do we distill all this down?
As Chee Koon alluded to earlier, we are positioning the business to allow us to grow. On the left-hand side, I've got a map of the world with our key markets and geographies color-coded by, I would say, growth intensity. So dark green for maximum growth, light green for light growth, and then gray for moderating or neutral growth. There are only two countries that are gray. One is China, and the other is Singapore for different reasons. In China, the reasons are well documented. I won't go into it. We're not saying we're going to shrink China, but we're saying that we are going to moderate the proportion that China will play as we approach SGD 200 billion. Singapore is a fantastic market for us. It's our home market, but it's small, and as I mentioned, we are the largest private landlord, or as it is.
So for us to harbor aspirations of further intensifying our presence in such a small market, I think it's unrealistic. Instead, what we want to do is to use our reputation and Singapore as our home base to expand into Southeast Asia, including Malaysia, Thailand, and Vietnam. And of course, you see the three markets that we are pressing the gas on as quickly as we can: in India, Japan, Korea, and Australia. Forgive me, four markets. On the right-hand side, I want to distill the three growth levers that I talked about earlier into how we are applying these growth levers into our strategy to grow our shares in our various countries and see how they come together. So the first of these is your thematics and strategies that I talked about earlier.
The second is the operating platforms that we have at our disposal to convince capital pools to come alongside and allow us to invest for them and drive return. And obviously, the products on the REIT side that we already have and believe we have the potential to introduce in these markets. On the left-hand side of the table, you have the current percentage contribution to our SGD 113 billion of FUM today and the target that we've set for ourselves, SGD 200 billion by 2028, and those percentages that we have set for ourselves to deliver for our shareholders. And you should see that the percentage growth will correspond to the colors that you see on the left. Okay? So you look across and you see the thematics that we are investing into with the products that we have.
We will apply the platforms that we have at our disposal, again, through partnership, through co-ownership, through joint ventures alongside our internal platforms, CLI CM, CLI DC, along with Ascott, of course, and the products that we have on the public side that exist today and also the products that we are thinking of putting together. So I hope that gives you a sense, right, in the 12 minutes that I had to try to encapsulate the three primary growth drivers that we will use to deliver SGD 200 billion to our stakeholders and shareholders. It's very much a work in progress, very much a dynamic, fluid situation. We are faced with an incredibly uncertain, volatile future. But again, as we all believe, this is where you separate the men from the boys.
This is where a strong team with the senior hires we have made on the countryside, on the product side, we believe gives us every confidence that we can outperform our peers and deliver this target to you by 2028. I have 10 seconds left. Anything that I would like to cover before I shut this down? If not, thank you very much for your time, and I'm sure everyone's waiting to hear from Janine.
We will now welcome our next group of panelists to share their insights on the strategic levers shaping a company's direction. On the panel are CLI's Group Chief Executive Officer, Mr. Lee Chee Koon, and joining Chee Koon is Mr. Suchad Chiaranussati, Chairman and Founder of SC Capital Partners Group. Two days ago, CLI announced a strategic investment of a 40% stake in SC Capital Partners Group. Mr.
Suchad has guided the firm's growth into a prominent real estate investment company with SGD 7.6 billion in assets under management across private funds and REITs. His visionary approach has also driven the establishment of strategic ownerships and partnerships across seven operating platforms. Moderating this panel is Ms. Janine Gui, CLI's Chief M&A Officer and Deputy CEO of CLI International. Janine leads the identification and execution of mergers and acquisitions opportunities globally to accelerate and scale CLI's business growth. She led CapitaLand in its milestone merger with Ascendas-Singbridge in 2019, as well as the restructuring of CapitaLand in 2021 and the listing of CLI in 2021 as well. Let's welcome the speakers onto the stage. I will hand the time over to you, Janine. Thank you.
Welcome, everyone. Good morning. Very delighted to have both Suchad and Chee Koon with us this morning.
We share more about the strategic transaction that was announced two days ago, and thanks, Julie, for giving the quick introduction. I think one of the things that I would like to emphasize arising from this transaction is the fact that we have acquired SGD 8 billion or SGD 11 billion of FUM, strengthening our foothold in Asia-Pac. That is an important milestone for CapitaLand Investment, and more importantly, three quarters of the FUM that is acquired comes from Japan. And that has elevated Japan to be our third largest FUM country after China and Singapore, and we are also very pleased to be a part of extending our fund management franchise expertise, as well as acquiring track record in Japan and, of course, the maiden entry of our J-REIT manager in Japan itself. So now let's get into the panel discussion. I'm sure the floor is very excited.
This morning, during my breakfast, I was bombarded with a lot of questions. So I told them that it's best to leave to the two men of the moment this morning to take some of these questions. But before that, this transaction opens up a new chapter for both SC Capital as well as CapitaLand Investment in Japan. And I'm sure the floor will really love to hear from the two of you. When the both of you first met, what were the initial thoughts that were running across your mind about that this could be a very interesting, very meaningful collaboration and partnership for the two firms? Maybe I can get Suchad to share first, and then Chee Koon can share his thoughts as well.
Thank you for the opportunity to come up here and also for the chance to be able to share our story.
I think the first meeting that I have with Chee Koon, who was introduced by Miguel Ko, I think the first thing that I have in the next three minutes, it will be a major decision whether I want to folded my interest into CLI or not, and it really depends on the people and the chemistry that I strike up in that few minutes with actually Chee Koon. He probably doesn't know about it, but a very, very important factor for me to bring back to my partner and told my partner we have found something that I could stand behind it and to say that this is something that we can work with and to grow together, and then one plus one equal to three. I have finally found something like this.
I think many of you may have known we have been talking to about probably 12 people that have been approached at that, and we have been telling them, "No, it doesn't work. It doesn't work for us." And I mean, I become a broken record of saying, "No, no, no, no, no." And it actually with Miguel, I'm very comfortable with Miguel, I'm very comfortable with Chee Koon, and Chee Koon will lay down in that three minutes what he wants to achieve for CapitaLand, and I just say that exactly, I think it's the way it should be going, so I want to say I think you were the determination factor, and actually your character and what you said in that meeting would actually resonate very well with me, so again, it comes back to people.
Thank you. Thank you, Suchad.
I mean, to be fair, actually, Janine and I, we looked at many, many deals, some really big ticket items. If you ask me, that could totally transform the scale immediately. But when you look at platforms, you look at some of these investments, it's not just about doing transformational deals just to grab the headlines. It's about looking for platforms, looking for teams that you feel that you can invest not just in a platform, but can really work together to accelerate the growth. We looked at platforms in the size of SGD 50 billion-SGD 60 billion funds under management, which Miguel alluded to earlier. We decided not to do, not because we couldn't afford it. We decided not to do because there were issues about culture that we are not so comfortable with.
And there's no point in trying to invest in a platform from SGD 60 billion, then it becomes it doesn't grow, or worse, it declines. It just defeats the purpose. But talking to Suchad, I mean, it's not just about the initial chemistry. Along the way, we talk about deals, we brainstorm about possibilities, and we generally open to talk about strategies. And I think even talking about new investment ideas, sharing capital partners. I personally think that it will really help to drive the growth, not just for SC Capital, but also will help CLI to learn more about the private fund space with Suchad. And his team has started out from day one, building a private funds business. Whereas from CapitaLand, we started as a developer that built an asset management business along the way.
I think there are many, many things that we can learn from Suchad and his team.
Suchad, on that note, perhaps it's also useful to share with us how you have built the legacy of SC Capital in the last 20 years. I know you shared with me and told me that you started out with, was it two or four persons in your office? And now today, you have 100 over people within the team. Maybe share a little bit about that.
I think some of you may not be aware that 20 years ago, I made a decision to create a private equity real estate Pan-Asian platform. From day one, it was very clear that I am determined to do everything I could with my partner to create a platform for institutional capital.
So when you decided from day one, you want to create a platform institutional rather than for your own wealth investment, you set up the company differently. You set up a platform very differently. So the fiduciary standard, the fiduciary responsibility, the setup that we have over the years, have withstanding many due diligence by the largest institutional investor in the world, in our process, in our whole thing we do. So I think I was very proud that that would have been set up. I think in our business, it's very difficult, but yet it's a very simple success factor that you need to have. Over the 20 years we've done, we have to be a good investor. You can do as much as you like the process, as much as you like, but if you cannot be a good investor, investors look around and they have many choices.
So if you cannot be an investor that can create an outside return consistently, there are many other choices out there. Investors doesn't need to keep your capital. So for us to be doing well, to be expanding, to be growing, the most fundamental thing is we must be able to identify, locate good deals, and be able to close that good deals with whatever capital we have and be able to entry and exit to show investors that you know how to exit. Entering into investment is just the beginning of the process. Raising money is also just the beginning of the process. The real process is when you can really exit, show the rate of return, and investors say, "Yes, you have done a great job. You didn't hold your asset too long." So there are a few fundamental things that you must do it right.
The other thing that I'm coming back to just now, the board had mentioned some of the things really resonated with me. It's the capital allocation decision that we as a company must be able to make. We had a discretionary fund with a full discretion to deploy our capital across Asia-Pacific. So that's about 12 different countries we could deploy to, and how we end up with 80% in Japan and then nothing in Myanmar, for example, or something like that, it is a capital allocation decision that we consciously make every day, based upon our opportunity right in front of us, and based upon the deal that we have seen, based upon what we know our capital is looking for us to do, so sometimes capital expects you to do A, B, C, and then you happily do something else.
If you get 30% return, people may forgive you. But if you don't do well, people hate you for it. So I think it is important capital allocation discipline on what to do, what not to do. Not every deal should be investable. And I think from our perspective, we must be able to have an extremely high discipline to be able to survive in the game that we are doing right now at the moment. And at the time going on, there are more larger players coming to the region. 20 years ago when I started off, there were a few managers, many of which are no longer around. At that time, we didn't have a major group coming in. Today, you have Blackstone, KKR, Apollo, you have people from HNA from China, Fosun, very big players came into the region.
It is not for us to be complacent and said we should be able to hit them head-on. If it did reason that I make a very responsible decision, responsible decision here to find a good partner that can work with in order for my platform that I created to become a sustainable platform that can serve 65 institutional investors that have come alongside us over the last 20 years. It is a decision that I make. It is a very hard decision. I must say, Chee Koon, when you build up something for 20 years, it is a very hard decision. I can assure you that. It is not an easy decision, but the right time you have to make that. I think the deal with Chee Koon and CLI. As many of you know, it is a five-year transformation.
So, what I have promised the board, what I have promised Chee Koon, and what I have promised my own staff, essentially in the next five years, we will lean on CLI. Additional capital to CLI can give it to us. As an independent company, we may not have that resources, but in order to use that resource well to scale up and to build our platform to be a sustainable, great platform over the next five years, and then over the next five years, we have time to integrate that into the CLI world, and I am very committed to make sure that integration goes well. I told Chee Koon and the board, I am not talking about 40, 50 people in SC Capital Partners today. We had four operating partners below that that had 200 over people.
When we talk about a transaction two days ago, it is a 250 people transaction. Therefore, it had to be extremely responsible. 250 people plus every family side of five. This is 1,000 people that I am basically surrendering or really going to a strategic partnership with somebody like CLI that had an impact on over 1,000 people that we're putting in. I don't take this responsibility very lightly. Rest assured, we have gone to a lot of talking to what our business is going to be. Just as we speak, we already talked about a very large data center platform that we are working together. With all this, it's actually 250 people that I like to bring towards the CLI, work closely with CLI, and to make it a much bigger platform that we have.
That is something that, sorry, I've taken a little bit longer, maybe a bit more mumbling, but it is emotional speed. You are asking someone that just got married two days ago to come and talk about it. It is a little bit to go. So our job, when I look at CLI, I say CLI like the funnel behind me, the vortex, there's a lot of water going down, water gets recycled. It is the recycling of capital. CLI's role, it really is just to recycle capital well. My role in a very small way is to take part of that capital to recycle it well and then make my platform, make our footprint and CLI footprint be complementary and grow together. That's exactly what I'm very committed to do. And I'm also hearing the same thing from Chee Koon as well.
So I'll stop here because I can go on forever, but you need to do.
Thank you, Suchad. I think that was indeed somewhat emotional speech from you, but thank you and appreciate you taking this very responsibly as well. But it's a good segue. You make an interesting point about some of the global competitors coming to Asia-Pac and doing it in a big way to raise new strategies, to raise new capital. So perhaps talking about our combined forces as a partnership, where do you see, how do you see us combining ourselves together and perhaps looking at how do we differentiate ourselves to Judy's point? Where do you see the synergies are, the opportunities for us to grow together in? Chee Koon and Suchad, we'd really love to hear that from both of you.
Thank you, Janine.
I alluded to some of those points earlier about curating deals, investment strategies, and whether we can also bring our capital partners to look at some of those interesting things that Suchad and the team are developing. But at the end of the day, the business itself is really about the people. I was also talking to Suchad about CLI's accounting people to SC Capital, people who understand our ecosystem so that we can help whatever that is possible, whether it's fundraising or access to resources that CLI has, because his team wouldn't know the CLI system so well, who to call, what kind of resources to pool.
Really, what we want to do is to give Suchad and his team the autonomy to run the business, but where we can, in terms of the resources that we have as a group, to help them to be successful from HR, from other resources. I mean, that's the idea of working out a successful partnership
I totally agree with that. I think the commonality between us is that we serve institutional capital. We serve our LP. So whatever that we have to combine working together in terms of adjustment so that both of us can serve our LP, combine larger group of LP better. That's something that we must be committed to do. I think that's something I'm much willing to combine the whole, committed the whole entire organization to make that happening. The integration, smooth integration, all that, it's very important.
And there shouldn't be any differences, really. People said entrepreneurial businesses and large organizations, they cannot be together. I don't agree with that because I do think that the common objective is that you just have to be doing good at what you're doing. And then just a very common idea that whatever is good for our limited partnership, it ultimately will be good for us. Okay? What is not good for our limited partnership, over the long term, we won't get the support from limited partnership. As a result of that, we wouldn't be a large fund management, asset management platform if we don't get support from our limited partnership. So that is very fundamental to me.
I think the other thing that is very fundamental is the nimbleness and the ability to make a decision, to go after a deal, to be able to really put forward without allowing something to constrain you too much, but yet you must have a very discipline. You must do proper due diligence, you must have internal process and all that, but as much as possible, anything that can create the inefficiency for you to make a good decision, we should sit down together and see what we can restructure that. Whatever that will cause inefficiency so that we end up making suboptimal decisions, either investment, going after a deal, capital allocation, we must try to do less of it. And that is something that is very, very clear. Come out in our discussion all the time.
Janine, just let me add on.
I mean, I just can't help but go back to Suchad's original point about dating. I actually didn't know the first three minutes of my meeting with Suchad was so important that determined the fate of the marriage between the two entities, but just reflecting, actually, a lot of the number of deals that I used to do at the platform level, a lot of time has got to do with that chemistry and that trust. And the first few minutes actually determine whether things can work or cannot work, but this is only the first part, the dating, the getting married. And along the way, I must tell you, Suchad's ability to look at big deals, to hunt for things that are difficult to hunt, getting himself into very interesting positions where he can look for deals and marry capital together.
And that's, to me, actually opens up my minds to possibilities about gearing up in terms of growth for the private funds business. So I'm actually very excited about the partnership with Suchad. He opens up my mind so much more than what I imagined that the world of private equity business could be. Thank you, Suchad.
Thank you. When I look at CLI, initially, people had kind of let me know the CLI is a different sort of organization from us. But after I looked through CLI and analyzed very closely, the lodging and our lodging, it's almost identical in the sector that we play in. CLI had a fantastic lodging platform. We in Japan, hospitality platform, in the 10 years that we had invested in Japan, it's in 2010, we have done 96 hotel transactions.
We sold 14, so add together, we did almost 110 hospitality transactions in Japan. We also have non-Japan assets. We had about 55 other investments we made outside. So in Japan, we had a very large operational platform in that sense, and the hospitality side of us and hospitality side, there's a lot of synergy there that's incredible. I mean, every day I'm talking to my colleague right now, I'm saying, "Okay, we're going to do serviced apartments in Japan." We're already calling Chee Koon, I'm talking to Chee Koon and say, "Look, we've got to talk to your colleague." So there's a lot of things that are happening. We're talking to our LP.
I've talked to my LP together, and we already kind of had them meeting up, our Abu Dhabi LP base and already meeting up with TS in Hong Kong, and we had a lot of very good meetings that are happening. So there's a lot of synergistic value, actually much, much more than people from outside really do it. Then on the private fund business, it's slightly different, but we know that CLI is moving the model, going more asset-light, and I absolutely respect the decision that Chee Koon made. It's not decision transformation. We're starting off from day one. It's an asset-light model, very asset-light. Matter of fact, actually so light that we actually use very, very little asset to grow the business of SGD 7.6 billion. Our co- investment, GP co-i nvestment, typically is 1%.
So I think for us, that's how little capital we use to grow our business. CLI will be likely to move that asset to our model. We will be here working with CLI hand to hand in order to make the transformation. CLI agreed to support us with strategic capital. It allowed us to scale up. Today in our business, it is about scaling up. But when you scale up in the old model of absolutely opportunistic, so in other words, one day you can buy a sector, the next day you can do that, and then the following you can do something else, those days are pretty much gone. Today in our business, it's all about having a thematic discipline.
So the data center digitalization, lodging that Andrew was alluding to, we talk about logistics platform, retirement home, having millions of people retiring, having 60 million, 170 million people traveling, therefore hospitality, lodging, all that kind of big, big macro movement is something that we must set up the platform to capture them. And if you have a discipline to capturing all that, I mean, let's say, for example, in the next 20 years, there will be 100-200 million people traveling in Asia-Pacific internal. And if you multiply that by the 5-year, 10-year next forward, it's billions of people traveling. I mean, if you are here in the middle of it, you can create a platform working with an operational platform, married with the discipline of investment, married with the capital accessibility. You put these three together, I can tell you it's very difficult to fail.
But if you have none, one of that, the other, no capital, you will fail. You have no operational expertise to allow you to make a better decision. Your chances you might fail. You don't have an investment acumen. Chances you might fail. If you have all three in this room here, for example, I can assure you that the success rate is much, much higher. That is my personal opinion, and this is why we believe that this is a great combination. Losing control over it in order to create such a great platform, it is something I am happy to do, to be part of it. I think the calling for us over the next few years, 10 years. I mean, I am actually looking at your SGD 200 billion by 2028. I think the dollar size you should change from SGD to USD.
I think that's something that you should be really thinking about. Within REIT of us, just on the data center alone, just on the data center alone, I would not be surprised that we are talking about SGD 50-60 billion assets that are accessible to the group here. On the credit side, I mean, there could be so many opportunities. So I do get very excited, and sometimes I don't sleep well at night because I get so excited about the opportunity right in front of us in the next 5 to 10 years.
I see a lot of excitement and ideas brewing, and I see a lot of questions from the floor as well. So now maybe we turn over to the floor, and you can raise your hand, and we can have the roving mic move over.
I think we have one question from the back of the hall. Please state your name and the firm that you belong to before you raise your question.
Yeah. Hi, morning. Brandon from Citi. I have just two questions for Suchad. The first one is, are you able to share some of your historical track record in terms of returns for the seven private funds that you have seeded? I think mainly the RECAP fund series. That's my first question. And the second question would be, I think you've been in Japan for a very long time, like I said, 20 years. But I think Japan itself now is in a very different environment, obviously, with the potential hike in interest rates and currency weakness as well. So how do you see Japan going forward from here? Yeah, thanks.
In terms of the track record, this might not be the venue to share that with you, but I'm very pleased to let you know that we have done seven or eight funds over the last 20 years, and my track record is actually five years before that with Westbrook Partners. We haven't had a single fund on an aggregate basis lost money on. So we had a 25-year track record that hasn't lost money from investors. We like to extend that for another 20 years. This is something that is quite an unusual achievement. We're targeting return on our fund of about 20% return. That's an opportunistic. On our core fund, we look at about 11%-12% return. We so far have met a lot of many funds have met that, but obviously, there were different cycles of timing.
For example, if you had some hospitality and you enter into the COVID, I mean, you're going to underperform your 20%, definitely. So we do have some of that, but I reported to you, overall 2025 year, we have not lost money from investors in any of the funds that we have. And we don't intend to lose any money from investors. Going back to your Japan question, I have traded JGB in my previous slide. Actually, I started my career in 1987, Japanese yen, trading JGB, trading treasury, and all that. So I've seen that interest rates in Japan have moved. Japan has moved from 75 all the way to almost close to 200 during that period. So what you're seeing today, Japan is just right in the middle of it. Please do not panic.
Between 110-150, Japan, it's in the middle of the range of the 30-year cycle. Japan will continue to do well. The only thing I want to share with you is that if you do have a particular fear for Japanese currency, please do not stop you from investing in Japan. You can use the currency to hedge. Japan is the only market you can hedge 10, 15 years forward. So your currency view and your sectorial investment opportunity view could be segregated. It doesn't have to be lumped together. So I would have just appealed to you that if, let's say, hospitality is showing you a growth rate of 10%-15%, and you say, "Wow, the yen just jumped from 130-150, so I don't want to go into Japan," you will miss the 20% growth rate on that business for the next 10 years.
So I think it's important managing your risk. It's another issue. But actually making an investment, you should look at underlying the business. And today, what I'm seeing in Japan, underlying it, it's fundamentally very, very good. I mean, you always had positive yield curve for the last 20 years. Your financing cost is relatively low. I mean, we have done 10 years ago when we bought our first hotel, it was 9% unlevered with people guaranteeing our financing cost at that time was 3%. So if I said yen is going to weaken, so I step out of the Japanese market, I would have lost that 10 years or 12 years of return. So it's important to don't let something scare you. It's fundamental return is very, very important. So I hope I answered your question.
Chee Koon, would you like to comment on the Japan market?
We've been seeing quite a fair bit of a flow of inbound and outbound investments as well for Japan for ourselves.
The big picture, I mean, Japan was, I mean, there was no inflation in Japan for many years. I think we started to see real inflation, increases in prices. I visit Japan very regularly. You go to the Family Mart, you buy a bottle of a drink. It's always been 100 yen for many years, for many, many years, until recently. Now you see 130 yen, 150 yen. So there's real inflation. That's point number one. Point number two, I think the Japanese government has made it quite clear they want the Japanese companies to be very, especially the listed companies, to drive ROE, to make sure that they can trade above NAV. So there are many restructuring possibilities that are happening amongst the Japanese listed companies.
Some of them have to shed their non-core real estate assets, and to me, that creates an opportunity, and there's another angle is the push by the Japanese government or the encouragement by the Japanese government to convince the Japanese savers to move their money from the savings account into the investment account. And to me, this actually creates a very ripe environment for us to do a lot more in Japan. Of course, we can't be strong in every single sector. Lodging, hospitality is one that we believe in. Logistics, there's heavy competition, but we have to maybe consider the modern logistics area, which is what we are studying and talking to some Japanese partners how we can scale, and of course, data centers. I especially like the lodging and the hospitality team in Japan.
If you look at Paris itself, just the city of Paris, it attracts maybe 50 million tourists on a yearly basis, roughly. Japan as a whole, I don't have the latest numbers, but maybe about 30 million or so. Yeah, countrywide. And that's not even accounting for the fact that the Chinese travelers going to Japan, if you compare what they have today and before COVID, it is 30% below COVID. So my view is that there's going to continue to be a lot more demand for hospitality products. And some of us may not know the inflationary pressure in Japan is real. There are fewer people working in the construction sector. A lot of the construction resources have been put in to build semi-con facilities in Kyushu and in Hokkaido.
Ballpark, the construction of new hospitality assets on a per-key basis is roughly 2x compared to the existing stock of hospitality assets. So having the ability to gain access on assets, being able to renovate it, drive the growth, actually creates tremendous upside. That's based on, I mean, macro, based on our teams on the ground. And if you talk to Kevin's team, our Japan serviced apartments, before COVID, we were selling maybe the best that Kevin has is maybe SGD 300 today. He's selling at SGD 900. Singaporeans will complain it's expensive, but he tells me that the Chinese people will go there to stay in his Ascott said it's cheap. And it's full. It's running 90%. So that's our belief in terms of what we see the promise of the Japan market. Chee Koon.
I'd like to add that today, there's no secret that many of the active investors are housing themselves in Japan, trying to look for hidden value in a lot of listed companies here, so the choice for us is you want to wait until they went through it, and therefore they clean up and create something nice for you to buy, or you want to join in early on with them and create a value for our investors, and I think the choice was very obvious. We would like to be there earlier. We would like to be there alongside with them. Sometimes we may be competing with them, but not in a hostile manner in order to create a value for our investors and for our platform. This is something that we see as a big opportunity. Sorry, Japan is so fascinating.
I mean, I spend so much time in the market. The other side of the Japan market is the collaboration with many of the Japanese corporates and companies because of the investment in terms of our investments in Japan and our collaboration from Japanese banks, the construction companies, the corporates. And we are bringing them in terms of investments in Southeast Asia, into India, into Australia. And why? I mean, because actually you look at Singapore companies in terms of philosophy, in terms of value system, very, very similar, very close to the Japanese companies. And there's comfort because we are very long-term strategic. So not just only for looking for investments in Japan, but also to work with them for outbound opportunities.
Thank you for the very comprehensive responses from both Chee Koon and Suchad. I think we have time left just for a couple more questions.
Derek, can we have the roving mic over there?
Hi, good morning. I'm Derek from DBS. Suchad and Chee Koon, I'm very excited about the marriage. I'm sure sparks will fly in the next few years. Just maybe one simple question. I think while we just announced the combination just a couple of days ago, I'm sure in your minds you will think about the next three, five years, or even a 10-year plan. We do not have much at this point in time, but could you let us know what's our plan in the medium term about the Japan strategy? Yeah, thank you.
Japan strategy today, we had about 82 hotels in Japan that SC Capital Partners owns. I think we would like to continue to expand it. On average, every year we acquired about eight to 10 hotels. That's what we've been doing very successfully in Japan.
I don't think that anyone that would trade in Japan would not show the deal to JHR because if they don't do that, it's only at their loss, so I think in my opinion, we will continue to have that dominant position in Japan. And if you consider our position when it comes to multi-brand, so we have another competitor of ours that have their own budget brand and very large in their budget brand, but we are actually brand agnostic. So we can do any brand, and that opened up a lot of flexibility for us. With that, we could easily, probably continue our growth trajectory. In Japan, there's this concept called warehousing. So what we have today, 82 hotels, we actually still have some partial warehousing for us. And that actually is SGD 1 billion-SGD 2 billion upside.
We will be just a matter of time. We will take them over. So all this very soon will find their way into our reach. Hopefully, our reach one day will be 100 hotels. I don't know. I mean, I'm not supposed to make a forward projection, but as a private client, you always kind of like to be able to make a forward projection, but listed companies always behave differently. I feel like our growth trajectory in Japan is not an issue for us. We're really able to find opportunity. Most importantly, we had the ability to extract the inefficiency out of whatever we purchased.
So we recently bought a 27-hotel portfolio last year, and we were able to get the yield to go up from three to about 12%-15% just by restructuring the costs out and saved SGD 70 million on a portfolio of SGD 900 million. That can really help us in a big time. So we have that ability that very few people have. And that's something that we continue. We'd like to extend that base to CLI and continue to work with the serviced apartment platform of CLI, hospitality platform of CLI. I hope I answered your question.
We can take one more question before we wrap up. All right. It looks like they would like to raise more questions to you over lunch, though. So be prepared for a very busy lunch later on.
So thank you, Suchad and Chee Koon, for the very generous sharing over the last 30, 40 minutes. Perhaps some last takeaway messages for the audience here. What I'm hearing from the last 30 minutes has been that there is a fair bit of a cultural alignment. There is that fiduciary element that both parties and platforms are very adhered to. We hold that very close to our heart in respect of whether to our various set of stakeholders. At the same time, there's this nimbleness in an entrepreneurial outfit that Suchad has built over the last 20 years that obviously, as CapitaLand Investment, we have a lot of respect for. So perhaps just some last takeaway messages for the audience, Chee Koon and Suchad.
Yeah, let me, I might use up all the terms. I'll be careful. I met Chee Koon, Miguel, and after that, followed by the executive committee.
I was very impressed with the executive committee. Every time I met that, I go back to my partner and tell my partner that I'm really, really quite excited, and they're very together. The lunches we have were very, very good lunches. Followed by the presentation I made to the board in Tokyo a week, about two weeks ago, I became even more convinced. Today, sitting here listening to the board here, the board had a very high determination to see CLI's transformation and put every effort that they have in terms of human resources, in terms of culture, in terms of providing actually a lot of support. I do feel that a lot of support from the board really wants Chee Koon and his executive team to really do well. We are a very small part of that coming into it, very small part.
So we might need to understand that we're going to be very humble. But our part is the part that CLI would like to kind of like move toward. So we will do everything we could to really work with the CLI team to make the transformation, the integration, the connectivity to be very smooth and very, very kind of like without any blip. Because in three- to five-year term, it will show whether we're successful or not successful. And I do see the early indication today suggests to me that the chance of being successful is extremely high here. I mean, Chee Koon, me, the board, executive team are very determined to make the whole thing work, even including in the future with a work in progress team. I'm sure there will be a lot more exciting things happening in the CLI world today.
I'm glad to be part of it. I'm glad to bring my 200-over family to be part of it. It is very important for me that we need to go to the right family. We do have that option. Thank you.
Thank you. Suchad covered most of what I wanted to say. Maybe just one point. Miguel mentioned as Chairman, as a Board, there's a tremendous focus from the Board to make sure that the funds business, especially the private funds business, is successful, which is why even as the Group CEO, I've also taken on the role as a CEO to drive the private funds business. So I'm fully personally accountable to make sure that it works, whether it's building the capability, investing in the platform. So I am 100% committed.
I mean, whether the private funds business can succeed or not, it's going to rest squarely on me and on the team. We have full determination to make sure we do the right things. There will be many deals that will come our way. It's not difficult to immediately become SGD 200 billion, SGD 300 billion actually within the year. It's not about just pursuing deals at all costs. It's about doing the right deals, building the enterprise value for all the shareholders. It's very sexy. I mean, I can say that I can immediately achieve that. I say I'm done. Then I can seek to retire. I won't be doing the favor to all the investors who trust your capital by investing in CLI, the REITs, and the LPs to trust us to look after your investments and to grow the enterprise value for the company.
Thank you. Thank you. Thank you. Thank you, everyone.
Good afternoon, everyone. It's very nice to see all of you here. Before we get going, I just wanted to say a very big thank you to Morgan Stanley and to Wilson and the team for partnering us on this event. We very much appreciate their support. And the other is a very big thank you to Grace and the IR team. Where is Grace, actually? Where is Grace? Grace and the IR team, this is a great event. We really appreciate this. I want to say this before I forget, but they always do such a fantastic job. As CFO, I have to say my favorite part is we actually originally thought of doing this event at Raffles City on the CICT property because we wanted to support our own tenant.
But it turns out Tony wanted to charge us too much, and we decided to do it here because it's cheaper. Go figure. Arm's length for us. Okay, so I'm going to do the last segment of the day, which is really about how what we've talked about and our growth really translates into some of the targets that we measure for ourselves. I want to start by saying that our focus is on shareholder return. As I think Gabriel mentioned, share price is a key measure for us. We are about making sure that we deliver that return to our investors. And that means share price and dividends. And from a share price perspective, we focus on three things: growth, quality of earnings, and return on equity. And you would have heard a lot about growth today, and that's our main driver.
We talk about doubling our funds under management to SGD 200 billion. The benefit for us is we have the largest capital base of any asset manager globally, right? With SGD 14 billion of equity and a very strong balance sheet, we're able to put that as a strategic advantage behind growth. And you heard some of that, right? We're putting more than SGD 500 million behind SC Capital to grow. Yesterday, we made an announcement that we're going to put more than SGD 1 billion of capital into Australia. The benefit of our balance sheet is it allows us to grow for the long term. And that's really our focus for us in terms of use of capital. Tying to that, how does that work? Getting to SGD 200 billion, we take this question a lot. What does that mean for earnings?
So we believe that if we double our funds under management, when we look at the different component pieces, we should get to more than a billion in profit. With more than a billion in profit, higher fee income, we believe that will help drive share price for us. Fee growth, Andrew has talked a lot about where it will come from: listed REITs, private funds in particular, lodging commercial management. And then finally, on the balance sheet, we're going to do this through being very efficient, relentlessly efficient capital use in sponsor stakes, in the public REITs, in the private funds, and then finding a balance between making sure that we're still rewarding our shareholders through dividends, through share buybacks.
I won't spend too much time on this, but we wanted to share a little bit as to what has changed from us from a financial viewpoint when evaluating the company. Three years ago, when we restructured, we were expecting a lot more real estate income from our ownership stakes in the REITs or the funds. Unfortunately, that has come down with higher interest rates, with a slowdown in China. We expected to get more divestment and fair value gains, which obviously did not materialize as much, even though we have had some good sales, and then fee income growth was slower because some of the opportunities in China or with the regional funds did not necessarily materialize, so we have adjusted our approach. We've adjusted how we plan to hit our financial goals. I think one is we have a deep focus now on driving our operating profits.
We know that the market, if you look forward, is not going to get the same kind of fair value gains. It's not going to get the same divestment gains that we used to get for the balance sheet investments or for potentially some of the stakes in the listed REITs, so it's a focus on operational profit, operating profit for us. We've got some high-return strategies, thematic funds, third party, and then on the M&A side, really, it is partly like this deal that we did together with SC. It's about investing and then growing together and getting those synergies and growth out of it, so this is, for us, a shift because it affects our numbers directly. For a 200 billion target for our funds under management, listed funds for us now 60%. We expect this to still grow. What you can see is organic growth.
As the team mentioned, as you know, we still expect to raise capital and grow from the REITs business, but as Miguel said, particularly for some of our REITs, this is not a growth at all costs. We're not pushing our REITs to go out and raise capital all the time. In fact, if anything, we had a strategic discussion last year, and one of our REIT CEOs actually said that they didn't think it made sense for them to raise equity for the next one to two years, and we discussed it, and we actually, I think we were in agreement that it makes sense. That is the best thing for that REIT, and we want, the same way at the group level, we want total shareholder return. We want the same thing for our listed REITs.
And that's the push behind, and I think something that we are very supportive of. It's the crown jewel of our franchise, and we want to build that. But if we don't grow the organic as fast as we would like, it means two things. One is there's a little bit of M&A required for the listed REITs business, but also new REIT listings. We haven't done a REIT listing in more than 10 years because it was always a capital recycling vehicle when we were a developer. But now, as a fund manager, the approach is different for us. This is a strategic advantage that we want to leverage up and grow. Private funds, which I would say is really the two next buckets. This is going to be the bulk of our growth.
We're talking about an additional 60 billion in growth, really from the private funds through organic and inorganic means. I would say I think Andrew has articulated very clearly where we think the opportunities are and how we look to grow that. Getting to SGD 200 billion is arguably, in many ways, the nice headline figure for us. What we want it to translate to is our earnings figure. For our earnings, if you look at us when we restructured in 2021 to 2023, this is just operating PATMI for the fee business, not the total PATMI, just the fee business. You can see we grew over the two years 1.4 times. This year is a little bit more challenging. Most of you who saw our first half numbers would see that it was a little bit challenging this year, but we're still growing.
But if you look at us over the next five years, we think we can more than double this, ideally stronger growth than that if we're able to. But we believe that by growing the different components of the business, lodging management has a public target. We think the number of rooms can increase. We think the margin can increase. Commercial management has actually proved to be one of our best growth drivers this year. When you put all of it together, we think we get to a much stronger quality of earnings from a group level. And if you see that little red bar on top, we are conscious as well that with the restructuring, we want to make sure that we're streamlining operations. Some of the new businesses are growing. Some of the old businesses we are restructuring.
We expect that we can get potentially SGD 50-75 million worth of cost savings over the next couple of years with some concerted effort. So we're making a push across all of the different entities, and we believe this gets us to a very good growth number over the next four to five years. If you put that together with the real estate component, we think we get north of SGD 1 billion in terms of absolute operating profit. And I say operating profit, 60%-70%, as mentioned, from our fee business, and then the remaining 30%-40% from the money that we have invested in our REITs, in our funds, or what we have on balance sheet. So this is also going to have to increase for us because of the capital efficiency component. We do expect this will grow really from two reasons.
One is we are now investing in high return strategies, whether it is special situations, value add, or even private credit where we get double-digit returns. You have to compare this to our current holdings, which are very core focused, which if you look at our REITs or our core funds, generally we generate between a 3%-5% ROE. We think if we invest this into higher returning strategies, this will actually boost the component that comes from the real estate investment business. Collectively, we think that gets us north of 1 billion from an operating perspective. The reason I mentioned the operating perspective is I think if anything over the last three years, we've realized the world is incredibly uncertain. With changing U.S. elections, geopolitics with China, we do think there will be parts of the portfolio still under pressure.
So when we look at the fair value gains divestments, we were previously expecting to get an uplift to our ROE from that component. Now we are working on the base case that we may get no gain there. We've put the number for China just to give you a sense for last year. For CLI China, and I would say the team did a great job in a very tough environment. But because of the fair value adjustments, despite being operating positive, we saw a negative 8% ROE return for China last year. You strip that out of the business, we were positive 6%. Could we easily get that to double digits? Non-China, absolutely. I think that we're very confident of. But when you blend it together, the challenge we think is potential swings on fair values in the coming years, which may impact our financials.
That is somewhat, to a certain degree, out of our control. It depends on how the market goes. If things improve, we can see an uplift. If things turn for the worst, it may drag us a little bit down on that component. So our focus is on the operating numbers. That's where we think that we earn our pay. So this is my last slide, and this is the one that ties how we want to deploy our capital. So maybe let me start on the left and just explain this slightly. And for the multiple people taking pictures, it will be or is already available online. On the leftmost side is our current capital employed. So capital employed for us is equity and debt. We have SGD 8.1 billion listed funds sponsor stakes, SGD 5.3 billion in the private fund GP stakes. This is what we hold supporting our entities.
We have SGD 4.6 billion balance sheet assets, which is down dramatically from the SGD 9 billion we had at the start of the year. And then for the fee managers, this is actually generally goodwill that sits on our books from previous acquisitions. So surprisingly, the bulk of this is actually from our lodging business. Over the years, we've acquired platforms from Ascott, Oakwood, Synergies. We've had a component of goodwill there. That gets us up to about SGD 20 billion. When we look forward the next four to five years, we expect to be earning money, which is the green boxes. So we see an uplift in our earnings component. And as most of you know, we've been paring down debt with the recent divestments. So we have a little bit of debt headroom to play with as well. So this for us is the growth capital that we have.
As I mentioned, this is a strategic advantage for us. So where do we see this capital being deployed in the coming years? And I would say this is an end state 2028 illustrative. And I tried to put a really big illustrative there, but Andrew told me I was overdoing the illustrative components. I've just left it at the bottom. But the idea is to show you what it could look like. There will be ups and downs on this journey because it depends on our speed of deployment. It depends on where we spend the money and what the funds are able to grow at. But if I start at the bottom, listed fund stakes. So we've come out a few times, I think, to say from a listed fund perspective, we currently hold 17%-41% for our listed REITs.
We do believe 15%-20% is a good level for us in our listed stakes. I would like to say, I guess, two things on this. One is share price of our listed REITs is critical to us. We're not looking to do anything that would hurt their share price. So we're going to be very responsible on this adjustment. This is a four- to five-year journey for us. We're not going out tomorrow to sell a bunch of REIT units and impact their price. One, they are very valuable to us. I think the second thing is in certain cases, we don't think we actually have to sell anything. So if you look at the case of, say, Ascendas REIT, where we have a 17% stake, every time Ascendas goes out and does a placement, we get slightly diluted, and we see that as a natural evolution.
So when we look at a four- to five-year journey for some of these, we do think that it will just naturally get us to these levels. But we have enough capital here that we actually don't think we need very much more to grow the business. So the listed REITs are at about SGD 69 billion right now. For it to get to SGD 100 billion, we don't think we need growth capital here. This is just becoming more capital efficient for us. Same for the private funds. Right now, we have about SGD 40 billion worth of private funds assets under management. We have SGD 5.3 billion in sponsor stakes. That's about 25% of the equity. If we get ourselves down to, as some of the most recent funds have, 10% stakes in the private funds, we actually have enough here to grow the entire private funds business.
When we look at this stake, this is actually, when we talk about strategic capital into SC Capital, we talk about SGD 1 billion into Australia. It's actually coming out of this block for us. This is not M&A or investments for us. The capital is self-funding for our private funds. We don't think we need to put a lot more. The announcements we make, we do it with a lot of confidence that we have with improved capital efficiency, enough funding to grow the funds business based on the capital there, which then gives us room to play. Because we've been divesting our balance sheet, we've pared our debt headroom down. Now we have funds for growth. For the funds for growth, this is going to be used really three ways. First is M&A, which you saw a glimmer with for SC Capital.
We expect to do more deals, and we've set aside a significant portion to grow through this format because we think we need capabilities in certain geographies, we need capabilities in certain sectors, and that's this component there. The other part there is the warehousing for new REITs and assets. So we've done this already. I think you've seen some of this from our actions over the last two years. We bought a Beijing office asset, which got seeded into a Beijing Renminbi fund. That was SGD 400 million of capital use. So we got the capital back. Likewise, we had what is now lyf Bugis on balance sheet, three to six months off balance sheet. We've set aside between M&A and warehousing more than SGD 5 billion of capital for this. So we believe that this part gives us great room for growth.
Whether it is private funds, REITs, there is an opportunity for us to use this capital for that. And then the last component at the top is our rewarding of shareholders. And this is also, we know, part of TSR for us. And we've been pretty consistent on dividends over the last few years. We expect we have strong cash flow and more than enough capital to keep our dividends steady. Hopefully, the business grows and dividends grow as well. We may potentially look at dividends in specie for our REIT units, as we have done in the past. I wouldn't say this is something that we will take lightly. I think we will look at this really depending on how REIT share prices are doing and how our capital deployment has been. And then finally, buybacks, which has been something that we've been doing consistently this year.
I think this year we've bought back SGD 340 million. I think we believe that we can keep run rate buyback because of the capital that we have. We can keep a comfortable share buyback run rate going forward without worry that we don't have enough for growth because our priority is really deploying for growth. The rest, we think, just makes us more capital efficient, helps us generate that higher return for investors. So that is our outlook and really how we think that the SGD 200 billion funds under management, we build that to more than a billion in profit. And that collectively, together with effective use of our balance sheet, allows us to grow and improve our return for investors. And with that, I believe we got a question.
Our panelists are Chee Koon, Group Chief Executive Officer, Andrew, Group Chief Operating Officer, and Paul, Group Chief Financial Officer.
The session will be moderated by Mr. Wilson Ng, Executive Director, Singapore Equity Strategist, and Head of ASEAN Property Research at Morgan Stanley. Wilson, who's based in Singapore, joined Morgan Stanley in 2010 and has 16 years of experience in equities research. Let's welcome our panelists. I'll hand the time over to you, Wilson.
Hello. Thank you, Julie, for that kind introduction. Hi, everyone. I'm Wilson from Morgan Stanley. I'm the Singapore Equity Strategist and Head of ASEAN Real Estate Research. It's been a busy and exciting week for all of us, as my chairman mentioned earlier as well. A lot of events are happening, and I'm glad it looks like we'll be ending the week on a high note. What CLI's board and what CLI's management as well has been sharing with us this morning, I think, has given us a lot to think about.
The board was talking about supporting CLI's bid to challenge the status quo. Andrew was talking about the right to play and right to win for CLI and Suchad, the importance of chemistry as well as synergy. And just now, for Paul, talking about the relentless capital efficiency to double earnings in five years and also room to play. I'm sure, like me, a lot of you will have a lot of questions for Chee Koon, Andrew, and Paul, which we'll get to in a bit. But what really struck me from the earlier presentations was Chee Koon's mention of transformation. We keep seeing and hearing the word transformation come up through the various panels that have come up earlier this morning. And I distinctly remember five to six years ago, soon after Chee Koon was appointed CEO, attending a get-together event at a mini golf bar at Clarke Quay.
I'm sure some of you were there with me at the event as well. That was a very different venue from what we were used to, and I'm not sure if you remember this, Chee Koon, but one thing that I did remember from your speech that day was that you said, "If you don't try, you don't know," and since then, you and your team have been trying a lot of new things. The transformation from developer to asset manager that you mentioned earlier really has been a multi-year journey for CLI, and even today, we are still seeing the company evolve, but I would also say that it looks like you may not be alone. If you look at the broader landscape, more and more we are seeing other property companies also trying to pivot towards asset management.
So if I could maybe kick off the discussion with that, do you see an advantage to moving ahead of some of your peers in this pivot? And how do you see CLI position relative to the competition?
Thanks, Wilson. I didn't feel like I've been running this CapitaLand much longer than five years. We're running like crazy, doing so many things. And even now, we are still building the business. To be very honest, if I have a choice, I think that we should have transformed to be an asset manager much earlier. Asset management as a strategy, if you ask me, is a strategy that's a lot more sustainable. You are really focusing on building capabilities, raising, and if you build capability, you invest well, you raise money from third party, and you can actually scale your business in a much bigger way.
I'm not against running a development business, but development business on the listed side is really, really challenging. To be a good developer, you need land bank. You need to have boots on the ground. You need to be super local. And from a company that originates out of Singapore, there's only so much you can do in Singapore. You got to build capabilities in China, Vietnam, India. And before we do the restructuring, I spent 70% of my time traveling to the different markets, talking to government officials, planning authorities, how to give them approval, the construction permits. Instead of spending time growing the business, I spend a lot of time doing all those things. And it sucks up all the energy to focus on growth and building the earnings income. And that translates to growing the enterprise value for the company.
And if you look at, apart from CLI, you hear a number of other players also transforming. I think everybody also sees that the value of an asset management platform. I think we have been lucky that we did it in about 2021. If we had delayed that restructuring a bit later when the war started, when interest rates started to hike, I think we have been, and China's slowdown really kicked in, I think it would have been impossible for us to have done the restructuring. So it was timely that we did it. It was just a bit unfortunate that we met with all the complexities, all the macro factors that slowed us down in terms of what we wish that we could have done. But even then, we stayed razor-focused in building the capabilities. And I mean, quite confident, Asia-Pac growth, we are really quite settled.
We are 80% there, a bit more capabilities that we need to build, and we're actually raring to go for Asia-Pac.
Thank you for sharing that, Chee Koon. I think the other thing that really struck me from this morning's presentations also is that there are a lot of targets that were being shared through the different presentations, from looking to double earnings to target exposures to various markets. Now, having these targets are definitely very useful to demonstrate how committed you are to your strategy. And I know each of you is very confident of achieving those targets. However, some things may be easier to say than to do. What assurance can you give to us and the audience to give us the confidence that you will be able to achieve those targets?
I think we have been very consistent in terms of our communication to the investors.
We share the good news. We share the difficult news. I mean, we have not shied away from communicating our strategy, and including some of the challenges that we face, could be asset classes, could be markets, we don't shy away. That's point number one, and the second, too, is the razor-focus in terms of execution, building up the teams, changing the teams, and it's quite evident, and today, we are a lot more global. All our country teams are really dominated by the local country heads who are very familiar in terms of operating, finding deals, solving problems, creating value, raising money. So that takes time to build. It's not just about recruiting people. It's about finding people with the right value system, the culture.
Because you're going to be a private funds business, you have to leave a lot of the deal sourcing, a lot of the investment decisions to the teams on the ground. There's going to be co-investment. There's going to be carry. And that's how we spend time to readjust the company. And of course, the thing I mentioned earlier, in terms of, I think the listed REITs, that part is sorted out. I think there will be growth that will come. Lodging management, we spend time turning around the business. I think Kevin and his team is raring to go. Commercial management is stable. I think we can continue to grow. And I put myself, I mentioned earlier, to drive the private funds business. Until we see a certain level of traction, that's not going to change.
I'm personally committed to make sure that it works to grow, to invest capabilities, and to raise money. Otherwise, I think there will be no credibility that I can convey to the investors.
Thanks for that, Chee Koon. Maybe just one last thing for me before you open up to Q&A to the audience is, and I think Paul touched on this a little bit earlier, when CLI looks at trying to balance delivering capital returns with reinvesting for growth, i.e., calibrating earnings growth versus dividends versus share buybacks, what kind of balance are you looking to achieve in the next three to five years? And what would that ideal steady-state scenario of that balance look like?
Thanks, Wilson. I think our priority is always growing the top line and growing our earnings. So if there are opportunities for deployment, Suchad talked about SGD 50-SGD 60 billion opportunities.
I know Sanjeev apparently now has to get going over the next few months. These, for us, are priority. So if there are growth opportunities, that will always be the first place we will put the funding. All the capital available will go into that. But the nice thing about real estate is you get to plan in advance. Generally, you can see some of these at least several months out. And as we've been divesting, we're getting a fair bit of cash back. So obviously, paring down debt and holding some of it allows us a little bit more flexibility. So we do growth first, then we look at dividends and buybacks. Dividends for us, I think we've been relatively consistent in the market.
Every year, we've been SGD 0.12 for the last five years, with the one exception being where we dropped to SGD 0.09, and then we gave an additional SGD 0.03 the year after. That's generally base run rate for us. So it's really relatively easy for us to set aside knowing that we need a certain amount for dividends. And then I think the flex for us comes from any additional special dividend distribution in specie or buyback. And for that, we forecast out 12, 24 months for spending, and then we calibrate accordingly. This year, obviously, we've been one of the sort of higher up the leaderboard when it comes to buybacks. But that is because we could see that we were getting back SGD 5 billion worth of capital through the divestments. So I don't think for us it is a certainty that we would always have that amount.
But it's really for us. We look at the total capital, which you can kind of see, and then it is growth opportunities followed by dividends and share buybacks. So the balance will change year on year. But the idea for us is we've always talked about improving our return on equity. The faster we can grow that top line, the faster we will improve our ROE. I mean, of course, we set a target, hoping to achieve about a billion or so in terms of profitability 2028. Of course, we hope to be able to do much better than that. And once you can do that, and to be honest, I mean, on the road, raising funds, I'm actually a lot more confident in terms of fundraising based on the strategies. You'll find us having to use less and less of our own capital going forward.
But for some of the strategies and some of the things that we are trying to do, we still want to conserve the capital to give us that optionality so that you can build a much more resilient fee-income business for the investors. That's really our focus. And once you build up the machinery, and to be honest, whether the listed funds or the private funds, you can raise third-party capital, we have all the optionality with us to aggressively return capital to shareholders. We are just not at that point in time yet because we still see significant growth opportunities where we can grow enterprise value for the investors at this point in time.
Thank you. And actually, Andrew, would you like to comment on achieving that growth and having the right to play, right to win in the different regions that was mentioned earlier?
Where do you see some of the best near-term opportunities for CLI?
So when we discussed this with the board a few weeks ago, I think the phrase that I used was turning presence into performance. And I think this is a key differentiator for us. If you look around the region, we have teams in place that we have been building up over the years. What is essential for us is to ensure that our teams are ready to invest into the thematics and to the types of return strategies that investors want. The good news is, if I look back on the capital that we raised in the last year, for every dollar of capital we raised, 65% of that capital, SGD 0.65, were successfully raising into thematics, specific thematic strategies.
So that gives us reassurance that the products we are manufacturing are a result of us listening first and foremost to what capital partners want, what they are interested in. And I think Suchad mentioned earlier that in this day and age, what is clear is that they want choice. They want to be able to choose their countries. They want to be able to choose their strategies. And our own experience supports this, where we are successfully able to raise capital, successfully able to put products out. And then the other half of the coin is obviously, well, can you invest well? Can you deliver the returns that you are underwriting? And this is where the teams come in.
Two sides of the coin, your capital raising, listening to your investors, manufacturing the right products, and then on the country and fund teams, having the ability to find those assets that allow you to underwrite with confidence. Senior country leaders, investment teams that we are hiring, most recent of these yesterday, with Angelo Scasserra and Rahul Bharara joining Paul and his team here in Sydney and Melbourne, I think gives us confidence to come out and then say to our investors and stakeholders, we're going to double FUM by 2x. Without that confidence, it would be very difficult for us to come out and paint that picture. To answer Wilson's question through Chee Koon, how are you going to convince stakeholders that you can deliver SGD 200 billion or the TSR that we are confident we can achieve?
So it all goes back to having the right people, turning that presence into performance on the ground, and listening to our capital partners and manufacturing things that we believe they want to invest into.
Thank you for sharing that, Andrew. I think now would be a good time to open the floor to questions, and if you have a question, please raise your hand and you will get a roving mic to you. Fastest finger.
Hi. Mervin from JPMorgan.
Yes, we're going to vote for you. It's okay, man. Sorry.
I need the clients to vote for me, not for me,
but if you can tell everybody to vote for JPMorgan five stars, you can vote Wilson, too, but four- and- a- half, I think.
Share price is driven by many things. One of it is profit growth, ROE delivery.
I think in our recent business update briefing, earnings growth can be somewhat mixed with successful divestments. ROE could be 3%-5%. You talk about working with capital partners. A big capital partner is all my clients who are here and who are reading our reports later on. I mean, what is the, if the profit growth isn't going to be fantastic next year, ROE 3%-5%, how do we get our investor base or partners here to buy your stock? What's the catalyst we're looking for? Should we be more aggressive with buybacks? Because if a weak share price is very hard, it will be much harder for you to deliver your 2028 goals. Temasek can wait forever. My clients do not have the luxury of time. If they underperform, they may not be around to buy your shares.
So can you help us in terms of your thought process for the next 12-18 months? How can we help our clients here make money, outperform, drive share price higher, do more deals? Thanks.
I will make one easy statement and turn it over to Paul. Temasek will not wait forever.
Okay, so I didn't realize I'm the one answering this one. I like to believe that your clients and most of our investors are medium to long-term view on us. I agree that there is absolute movement in share price up and down in the near term, but we're all shareholders, right? And for us, we look at this as a multi-year journey. Next 12-18 months, absolutely. I mean, we've discussed a little bit first half results. Next six months, still challenging. Our exposure to China, the slower growth in certain sectors has impacted us.
But you have to look at us as longer-term holds than that. And it used to be, I remember when LPs, a lot of investors used to tell me that a short-term hold was two years for public investors. Somewhere along the way, it seems to have become a three- to six-month hold. But I think you have to look at us on a longer-term basis precisely for that, right? Yes, it's a perfect time to buy into us now. The reason we've been doing share buybacks is we think it's a good time to buy us. And if we look ourselves forward 12, 18, 24 months, we think then you see the moves like the M&A opportunities, what a lodging team is doing, where we will build up in certain sectors. We think that's where the growth will come from.
We can see the seeds of it now, but it will take time to materialize. So what I would advise your clients is to hold us for more than three to six months, come in when the timing looks right, with the fact being that we're putting all the building blocks in place, not for a short-term gain, but to build a really sustainable long-term return.
Thanks. I mean, they captured all the good points. I don't think there are things that you have not heard before. The key to us is to really be able to drive growth. Of course, obviously, I mean, we have so many things lined up. We wish that everything could be announced before quarterly results, before investors. Then we come here, it's easy to show you we are all growth-oriented. But good deals take time to cook, especially in an environment like this.
It's about striking the right deal, not just, again, just to do deal because we are not afraid of facing the investors. We just do not want to get ourselves to just pursue growth. Yes, short-term, I get away with the pressure of the headline pressure, but I'm creating longer-term problems for the teams or for even the future leadership. That's not what we do. I mentioned earlier, we looked at a very transformational M&A, apart from many other things that we look at. It's having the courage to walk away because we know short-term, it's good. Long-term, it's going to destroy value. Short-term, it will be, well, CLI is at it again. We do major transformational deal, AUM growth. We hit our AUM target. It's a highly easy and popular thing to do for any senior management team.
But the thing is, are we doing it right for the long term? We are not afraid of growth. We are not afraid of doing big deals. I mean, as you can see, the first deal I took over in September 2018 and January 2019, announcing an SGD 11 billion enterprise value deal, trying to buy over from Miguel, the whole company. So we are prepared to do big deals, including the earlier deal that we said no to. It's in terms of the value itself, we are looking at almost SGD 5-SGD 6 billion USD. It's not about one thing to do big deals.
It's about making sure we do deals so that we can answer to you not just every quarter, not just for this quarter, but in two years down the road, five years down the road, that we are doing deals that grow the future earnings potential for the company. So I just want to reassure you. We are growth-oriented. We spend more time trying to curate deals, trying to raise money than trying to think about share buyback. Not that it's not important. It is very important. The fundamental point is that all our compensation is tied to share price performance. So if share price doesn't perform, we get it. We get hit. I get hit the most. Obviously, I mean, I'd rather just boost share price and drive the share so that I get a good reward. But I mean, we have to look at it.
What does it mean? Because we are equally invested as the investors in CLI. So share price performance is definitely important.
Thanks very much. Very loud and clear. Share price is very important. I agree. It's had this been a great deal. All would make sense. This SC Capital, very complimentary. Kudos to Janine. Perhaps she needs a pay raise as well.
Thank you. Next question, Choi.
Hi, Choi from HSBC here. Two questions. One on Andrew's slides. I think in your slides, you introduced, you actually listed three regions for new REITs: India, China, and Japan. And Australia, sorry, actually four. So you launched Japan through an inorganic sort of acquisition. How should we think about the other three regions? What's the plan for that? And then my second question on equity base.
So I think in the slides, we have more than SGD 1 billion earnings by 2028 to 2030. Is that SGD 1 billion corresponding to today's equity base? Or how should we think the right equity base for that SGD 1 billion earnings? T
hank you. Why don't I take the... Okay, thanks, Choi. On the REIT side, let's start with C-REITs. I think this is something we talked about before. It's very tangential and complementary to what Tze Shyang is trying to do, right? China for China. We've started with the private side of the business, matching RMB to RMB. We are well on our way on the debt side of the business with Panda Bonds, RMB loans. It's really helping that the cost of Chinese capital borrowing has come down below Sing dollar borrowing. That has really flipped around. We can't swap it quickly enough.
So, what's missing is RMB equity on the public side. And that is something that I think the Chinese government understands. I think we were one of the first to go in at their invitation to have a discussion about what is it about the REIT environment that they should be paying attention to. My personal opinion is that the Chinese real estate market is arguably the second largest real estate market in the world. The Chinese government wants a stable, tangible asset that its population of savers can invest into. I can't think of a better product than a REIT. And I think it comes along at the right time for the Chinese domestic investment environment as a whole. But like we see in all REIT regimes, this is going to take some time. They're going to figure this out. The current set of rules doesn't really work.
But as a product, it makes perfect sense for us and perfect sense for what Tze Shyang is trying to do. So I think as soon as we believe the conditions are right, you should not be surprised to see us come out with a domestic REIT, C-REIT product. In Australia, again, the market is very established. The key decision there is obviously internal versus external models, right? So something we study very hard. As a product, it makes a lot of sense in Australia. The Australian market understands the product very well. It works well in Australia. But you still see very mixed performance. Some of the Australian REITs now are not doing well. There's a lot of market speculation about where their future lies. Given that we've just made a couple of senior hires, we are going to invest AUD 1 billion into Australia.
It would be very natural for us to look at this space as well to see what we can do. So I would say it's a complementary product, but not something perhaps as tangible or as concrete as a C- REIT. And then lastly, on India, you look at how the Indian REIT market has exploded in a good way. We actually think it's a bit ahead of itself. It's highly total return-driven at the moment. The fee structures don't make sense. The borrowing still doesn't make sense. So all of it has to sort of flow into line before we consider it seriously. But again, if we are the leading business park, top three business park, top three logistics, top three data centers, and whatever else we may choose, or Sanjeev may choose to go into, you've got an emerging REIT landscape that is very interesting.
You've got an InvIT ecosystem for infrastructure assets that is also emerging very interestingly. Again, it gives us an ability to look at another capital pool where you logically want to park the assets and match that with the currency as close to home. So if I look across the countries that we are focusing on, the three countries that naturally pop up to us are China, India, and Australia. Different stages of thought and design into it. If you ask me five years from now, would we have one REIT in each of these markets? I think that's absolutely potentially possible. Or organic? Either way. Either way. On the question on the equity base, yes. So we are targeting to get above SGD 1 billion in profit. Ideally, we would love to be more than that. It's not a 1.0 type, 1.0 billion.
Our equity base will correspondingly adjust for it. We're currently close to SGD 14 billion equity base. If all the country teams and product heads here and all can grow us to SGD 1.4 billion, perfect. SGD 1.4 billion, SGD 14 billion equity base gives us a 10% ROE. The way the current plan works is we are assuming a reduction in capital. There is a reduction factor in there, but it's not a linear journey for us because it probably will depend on how fast the teams are able to deploy capital and grow the business. We're going to pay our dividend. It will reduce our capital base. We'll see some potential fair value movements that will also adjust our capital base. And then depending on the growth opportunities, we'll know how much to buy back on shares in terms of the equity.
So I would say we do think it reduces from the SGD 14 billion. In the longer run, as Chee Koon mentioned, we don't think we need as much capital. But how fast we move over the next four years will really depend on how effectively we can redeploy. If we can redeploy for growth, then the reduction will come slower. But eventually, we do think that it's very easy for us to drop this by SGD 2 billion to SGD 4 billion. Yeah, I just emphasize again what Chee Koon said about how strategic the balance sheet is and our capital base is. And the comment was that we are actually the largest asset manager globally in terms of the capital that we have at our disposal to deploy internal capital.
And so when we discussed this with the board, the board's advice to us was, "Listen, this is highly strategic in this day and age because the inbound inquiries we are getting are all from folks who don't have what we have." And so you can look at it in two ways. Do you want too much of a good thing or do you want not enough of something that everybody wants? And I think we prefer to take the former now. Let's hang on to this incredibly strategic capital and let's see what we can do with it in a situation where increasingly partners are coming to us and asking us to share in that capital, deploy capital to that. So exactly to Paul's point, let's take the next couple of years and see what we can do with this.
Depending on where we get to, we can then shape the capital efficiency or solve for the capital efficiency equation by returning excess capital as we see fit and as you see fit. Maybe I can get Kevin to share. He's too quiet. To share the journey of how Ascott, how it transformed from an asset-heavy business to an asset-light business, first giving some capital to do some acquisitions, and now the fee income is just solid. Kevin, why don't you share a little bit in terms of the journey? Sorry, this was quite unexpected, so I'm going to go unscripted. I think if you think about Ascott as a journey, it started in the year 2000, and that's where we are more an owner-operator. Everything that we manage is pretty much owned by our balance sheet or one of our funds or REITs.
That mindset continued for a very long time. Until the early 2010s, I would say, that we went out to third parties to say, look, we'd be happy to manage some of your assets and earn a fee out of it. And lo and behold, we actually gained quite good traction. In 2008, we only had 20,000 keys. Today, we have close to 170,000 keys. We grew about eight times in the span of 15 years. That required a long mindset journey whereby we need to stop behaving like owners. We need to start behaving like operators. It's not an easy journey because when you're an owner, whatever you do, whatever you say is right, right? When you are serving a third-party owner, you really need to put yourself in their shoes, understand what they want, and make sure that your objectives are aligned.
So that transformation took us a couple of years, but I'm quite glad to say that we've brought in new people, we have fresh blood, we do new things, create new brands, and that actually gained quite good traction for us. And today, the journey is not complete. We went from asset-heavy to asset-light, managing third-party properties. And we're going to move even further, right, from being asset-light to people-light. And that's embarking on a franchise journey whereby we don't even manage the properties by ourselves anymore. It's going to be managed by franchisees like what we're doing with Quest in Australia. So you will see that although today, globally, if we count every single body at the property, we have maybe 16,000, 17,000 people, but people that are on our payroll is probably about 500 plus people.
We're going to even use that 500 plus people and not increase any more headcount significantly and continue to grow and manage even more properties through a franchise format. That helps us move from asset-heavy, asset-light to people-light, driving ROE much higher. I think that's probably a journey that we are going to undertake with the private fund as well. I see a lot of similarities between the two.
Thanks for that, Kevin. We have time for just one last question, Brandon at the back.
Hi, just ask two questions if I have time. The first one will be with regards to ROE. I think Paul was saying that you were targeting double-digit ROE. How should we look at it given that one of your capital top-up is going to come from sell down of stakes in your REITs and also your private funds?
Looking at where the REITs are trading at, if you were to sell them down, it would actually be ROE dilutive, right? That's my first question. The second question would be if we look at the deck where you put this M&A of platforms, there's a bracket there that says largely private funds, right? But if you look at SC Capital, it came with six billion of listed FUM. So is it correct to say that if any platform comes into the market with a decent listed platform, it would not be appealing to you?
Yeah, thanks. Maybe let me start with the M&A component. I would say the focus for us is growing the capabilities and areas where we are not currently as strong. For us, that's why it's largely private funds. We are focused on building that component.
I think with SC, we ended up being incredibly fortunate. There's a very strong Japan team, a very strong private funds team, and they also happen to have 6 billion worth of a listed REIT, which was a beautiful addition to us because we've been looking at the J-REIT market for some time. So I wouldn't say for us it is, we wouldn't do a deal if it had a listed REIT. I think it is more the fact that we are focusing, we've been looking for private fund platforms, areas that can help grow that capability. So we wouldn't discount the listed REIT side. On the ROE component tying to potential 60% stake reductions in the REITs, which is why I think the focus for us is on operating profits, operating ROE.
So we don't disclose the carrying value for us for the different REIT stakes that we hold. Some are below book, some are above book. Partly, it is a function of where we acquired the stakes or how it grew. So there is some variability to that. As we sell down or reduce some of these stakes, there will be some fair value gains or movements, divestment gains or losses as we do that. That will come in time. I think that one we recognize that there is never a perfect time to sell anything, right? In some cases, we have to make a disciplined approach. So as we look at the next four to five years for the REIT stakes, we may see some movements similar to when we divest some of the assets on balance sheet. We'll see some gains, we'll see some losses.
I would say that we look at that separate from our operating return on equity. So we talk about reaching SGD 1 billion, we're just talking about the operating component. We may have some movement up and down as we divest some of these
stakes. Okay, so that's actually about all the time that we have for this session. But before we break out for lunch, Chee Koon, would you like to share some closing remarks?
No, thank you all for coming. Just I hope at least after today's session, the key takeaway is that we are positioning the company to grow. A lot of it will come from the private fund side. The idea is to grow from today, where we are about SGD 110 billion in terms of funds under management, to SGD 200 billion. Asia- Pac itself, we are more or less quite there in terms of capabilities.
I personally think that with the focus now to also look at the U.S., Suchad is right. We potentially can go even higher than the SGD 200 billion that we set out for ourselves because the U.S. market is really big and deep. You get it right, you actually can grow very, very quickly. And the key is to make sure that we find the right deals, deals that can really help us to generate long-term enterprise value for the group. Thank you.
All right, thank you, Chee Koon, Andrew, and Paul. Let me now hand the time back to Julie.
Thank you very much, Wilson, and thank you, Chee Koon, Andrew, and Paul.