Written by Rishav Chatterjee and Ayushmann Ojha
(Reuters) – Australian developer Lendlease will divest from its overseas construction business and release up to A$4.5 billion (US$2.9 billion) of capital to shareholders, putting an end to its international ambitions to shift focus on domestic operations.
Lendlease said in a statement on Monday that it will form a new capital release unit (CRU), with the aim of recycling A$4.5 billion by winding down current transactions.
The construction company said it aims to save A$125 million annually within 12 months, and return A$500 million to shareholders through a market buyback plan.
Lendlease has recently faced a lot of backlash from its shareholders who have in the past pressured the company to shift its focus towards Australian operations, making the most notable change since the sale of its wealth management business to National Australia Bank (OTC:).
Lendlease shares are up nearly 10%, heading for their best day since April 2020, if gains hold.
“The strategy announcement addresses key investor concerns about the unprofitability of offshore companies while suggesting an orderly exit,” UBS analysts said in a note.
Lendlease will book impairment charges of up to A$1.48 billion, and reduce investments in its overseas projects, but maintained its forecast for the group's return on equity for the 2024 financial year.
“We recognize that the performance of our security prices and returns to our security holders has been weak as we have faced structural challenges and a prolonged market downturn,” said Michael Ulmer, Chairman of Lendlease.
The company will maintain its investment platform in international markets, as it looks to grow the funds it manages, CEO Tony Lombardo said.
($1 = 1.5078 Australian dollars)