Principal completes Internos acquisition

Principal Global Investors (PGI) has completed the acquisition of Internos Global Investors.

First announced in November last year, the deal sees UK-based Internos become part of Principal's multi-boutique operating model, changing its name to Principal Real Estate Europe (PREE).

Set up by Andrew Thornton and Jos Short (pictured) in 2008, the European investment manager adds significant real estate investment capability to PGI, bringing with it a platform of more than 100 employees based in eight European offices with about €2.7 bn in assets under management.

Internos also has regulatory approvals that allow it to offer investment solutions to clients and investors across key European jurisdictions.

PGI is a wholly owned, indirect subsidiary of the Principal Financial Group, a Nasdaq-listed financial and investment management group based in Des Moines, Iowa.

Principal Real Estate Europe is part of PGI's dedicated real estate business, Principal Real Estate Investors, which manages or sub-advises on $79.2 bn (€64 bn) in real estate assets globally at end-December 2017.

'This acquisition marks a significant step in our strategy to grow PGI’s investment capabilities and operations in Europe,' said Tim Stumpff, CEO of Principal Global Investors Europe. 'We are excited by the opportunity to expand our client base in Europe alongside offering greater access to attractive pan-European Real Estate investment opportunities to our existing clients globally.'

As part of PGI, the European real estate firm will retain its investment independence, while gaining access to the resources and scale of a major financial institution, and its team remains unchanged.

Elaborating on the rationale behind the acquisition, Andrew Thornton, CEO of PREE, pointed to the deal as a continuation of Internos' journey. 'We've spent the last decade building a truly European business that's as French in France as it is German in Germany. The combination of our European platform and expertise together with Principal's investment capabilities and access to global capital is going to create some exciting investment opportunities at an interesting phase of the real estate investment cycle.

'Since signing contracts in November, we have had the opportunity to meet more of the PGI team and to explore a range of strategies to expand our investment activity across Europe.'

Interesting times
Expanding on conditions in the European real estate market, Thornton said, 'It's an interesting time for European real estate. While we are all aware that the prevailing low-interest rate environment has led to significant asset price inflation, we're also very clear that in Europe there has been very sustained economic growth. For many European countries, we are now into the fourth year of growth, which is evenly spread both geographically and across sectors and this is feeding through to the underlying occupier demand for real estate.'

'Against this background, the supply response has been muted with people learning their lessons from the last financial crisis, which has created a somewhat benign, indeed positive environment for income and income growth strategies from real estate,' Thornton added.

Internos co-founder Jos Short added, 'European real estate continues to benefit from a historically broad premium over most other asset classes including index-linked and fixed rate bonds. Add to this the benefits that diversification provides during times of volatility and all the reasons for having a multi-sector, multi-asset strategy hold true. Real estate has a significant role to play.'

Talking about the synergies, Short said, 'It's about best practice and understanding investor trends globally. Our clients will benefit from the on-the-ground knowledge that we both have and the strategic research and advice that a group like Principal can provide.'

From Principal's perspective, a European real estate investment manager adds another dimension to the wide variety of solutions already provided by its multi-boutique model and complements recent growth in the firm’s European footprint.

Summing up the deal, Thornton said, 'It’s pretty straightforward really – the chemistry and strategic fit are first rate. Now it’s all about doing a good job for our clients, offering thoughtful investment solutions and having access to both opportunity and capital more broadly.'


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