Cromwell Property Group has entered a conditional deal to purchase European property funds manager, Valad Europe, for $208 million.
The deal, to be underwritten by a $216 million convertible bond issue, will see Cromwell acquire the pan European funds management business with assets under management valued at approximately $7.6 million, from Blackstone Real Estate Partners VI and Valad Europe senior management.
In an announcement to the Australian Securities Exchange (ASX), Cromwell chief executive, Paul Weightman, said the move presented "the opportunity to acquire a successful, value add property funds management platform with scale across a number of geographies and sectors".
"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," he said.
In the ASX statement, Cromwell revealed the convertible bonds issue will be made by Cromwell SPV Finance Pty Ltd, paying a fixed coupon rate of no more than 2.375 per cent per annum, over a five-year term.
"Prior to maturity, the Convertible Bonds are convertible into Cromwell stapled securities at a price of at least $1.12 per stapled security (underwritten minimum) (subject to certain adjustments), which reflects a premium of five per cent to the Cromwell stapled security closing price on 23 January 2015," the company said.
Cromwell said the acquisition and convertible bond issue would see the company's operational earnings neutral for the 2015 Financial Year, and greater than five per cent accretive for the 2016 Financial Year.
The move will also see Cromwell's external assets under management increase to approximately $9 billion and funds under management earnings contribution increase to roughly 14 per cent, while pro forma gearing is expected to increase to 45.4 per cent following the completion of the acquisition and convertible bonds issue.
