French property developer Altarea has entered into exclusive negotiations with the shareholders and the management of the European real estate investment and asset management group Primonial with a view to taking full control of the Primonial Group by 2024 in a deal valuing the business at €1.9 bn, excluding potential earn-outs.
Under the operation, which reflects a multiple of around 12-13x the average EBITDA over 2022-2023, Altarea will acquire 60% of the capital of Primonial in the first quarter of 2022 and the remainder in the first quarter of 2024.
To finance the acquisition, Paris-listed Altarea plans to carry out an equity raise of €1.2 bn along with a €800 mln five-year bank loan from a syndicate of four mandated banking partners (BNP Paribas, Crédit Agricole CIB, Natixis and Société Générale).
Altarea will buy the platform from Primonial’s current shareholders, Bridgepoint, Latour Capital, Société Générale Assurances.
In a statement issued on Wednesday evening, Altarea said the deal ‘will create an unrivalled group in Europe, an independent leader in real estate savings, investment and property development’. It will create a new combine with roughly €30 bn in real estate assets under management as well as a minority stake of 15% in La Financière de l’Echiquier, which has €13 bn in financial assets under management. Two-thirds of the assets will be located in France, one third in the rest of Europe (including 24% in Germany).
With 2,750 employees, the new group will have the capacity to operate across the entire real estate value chain, as investor and developer, on all asset classes, with powerful distribution and wealth management advisory capacity. Alain Taravella, founder and chairman of Altarea, said that the group will be looking to grow further beyond the deal, targeting €50 bn in real estate assets under management by 2025.
‘Continuing to strengthen its skills platform to serve its clients, Altarea has identified the asset management market as a fast-growing sector and a natural extension of its business,’ said Taravella. ‘The move will allow us to take our growth strategy in the promising urban transformation and real estate savings markets by providing Primonial Group with support for its development and long-term visibility. Together, we will form an unrivalled platform of expertise and skills in Europe, creating value for our customers, partners and employees.’
Taravella said that the operation, together with its new retail joint venture with Crédit Agricole Assurances also announced today, will allow the group to 'strengthen its development potential, including internationally, and its operational profile by combining growth and recurring results.
'This industrial project meets the needs of all our clients, and particularly investors who are increasingly looking for diversified products to invest in real estate. Thanks to Primonial, we will be able to offer a unique range of products and solutions across all real estate businesses, asset classes and markets. In a low interest rate environment, the Group's growth will now be fuelled by both urban transformation and real estate investment and saving markets.'
Stéphane Vidal, chairman of Primonial Group, who will remain in charge after the operation, said: ‘With this project, which gives us a new dimension, we are choosing to join forces with an industrial group characterised by its entrepreneurial spirit and long-term vision, a real estate leader in the urban transformation market. Together, we will invent a new operating model and continue to innovate in the service of our respective and shared clients. We will thus be able to take our development plans to an even higher level by positioning ourselves on new types of developments and gaining market share with an original and comprehensive approach.’
Management stays in place
Primonial Group’s management team will remain unchanged and will retain decision-making autonomy within the new group.
Laurent Fléchet, deputy CEO of Primonial Group, will continue to lead the European Real Estate Investment Management activity alongside Juergen Fenk and Stéphanie Lacroix. They will be assisted by the leaders of the local structures, starting with Grégory Frapet for France, Juergen Fenk for Germany (acting in the position ahead of the upcoming arrival of a new leader), Fabrizio Bonavita for Italy and Ronan Bodere for Luxembourg.
In addition to his role as chairman of Primonial Group, Stéphane Vidal will remain chairman of LFDE. The company is 85% owned by the same current shareholders as Primonial, Bridgepoint, Latour Capital, Société Générale Assurances.
‘Along with LFDE’s current shareholders, its management and all of its staff, we aim to intensify the development strategy of this stellar asset management company by broadening the range of asset classes it covers and expanding its distribution internationally. The synergies implemented between Primonial and LFDE in the service of retail and institutional clients will naturally be maintained, with increased resources and even greater growth potential,’ said Stéphane Vidal.