CROMWELL BUYS EURO BUSINESS
Written on the 27 January 2015
CROMWELL Property Group (ASX: CMW) has acquired a growing pan European property funds manager that has approximately 5.3 billion (A$7.6 billion) of assets under management.
CMW will outlay approximately $145 million (A$208 million) for the acquisition of funds management platform Valad Europe, which operates across 24 mandates and funds and 13 geographies.
This will increase total CMW external assets to approximately $9 billion and funds management earnings contribution to approximately 14 per cent.
CMW CEO Paul Weightman (pictured) says the acquisition serves the company's aim to increase earnings in funds management.
"The acquisition of Valad Europe presents the opportunity to acquire a successful, value add property funds management platform with scale across a number of geographies and sectors," says Weightman.
"The business is a strong cultural fit with Cromwell, is complementary to our existing funds management operations, and furthers our strategy to increase the earnings contribution from funds management to approximately 20 per cent."
The agreement to purchase Valad Europe from Blackstone Real Estate Partners VI (Blackstone) is conditional on CMW and Valad Europe receiving regulatory approvals from the UK Financial Conduct Authority and the Guernsey Financial Services Commission.
These approvals are expected by 9 April 2015, with settlement to occur immediately after.
Head of Real Estate Europe at Blackstone, Anthony Myers, says the company has been a successful investment for them since it was acquired in 2011.
"Valad Europe has been a successful investment for us and the business continues to strengthen its presence in the European market," says Myers.
"We wish the team well with Cromwell and are confident that they will continue to create further success."
The acquisition will be funded by a Convertible Bond Issue to be paid at a fixed coupon rate of no more than 2.375 per cent per annum over a five-year term.
CMW says together with the acquisition, this will see its operational earnings neutral for the 2015 financial year, and greater than five per cent accretive for the 2016 financial year.