Oaktree and Pimco become majority owners of Polish developer

US investors Oaktree and Pimco have completed the acquisition of just over 41% stake in Warsaw-listed developer-manager Echo Investment in what has been described as one of the largest real estate deals ever in Poland.

The stake in the developer, which has a market valuation of €680 mln, has been acquired by Echo BV. This is a vehicle indirectly owned by Griffin Topco III, which in turn is controlled by funds managed by Oaktree Capital Management, and Bravo II, a fund managed by Pimco.

Warsaw-based Griffin Real Estate executed and will manage the Echo investment on behalf of the investors.

The European Commission granted approval for the deal on 22 May and the investors will announce a mandatory tender offer up to 66% of Echo’s shares. The offer will be guaranteed by PZU Group, the largest insurance company in Poland.

Acquisition finance for the majority stake from Polish billionaire Michal Solowow was provided by PZU's investment branch, TFI PZU.

'Oaktree has been steadily increasing its investment activity in Poland since 2006. This transaction, given its size and complexity, continues to strengthen our position as one of the most dynamic global investors in Poland and demonstrates the confidence we have in our partnership with Griffin Real Estate,' commented Karim Khairallah, managing director of Oaktree’s European Principal Group.

Oaktree has been a major investor in Poland for almost a decade now and has controlled Stock Spirits (Polmos Lublin) and Zielona Budka as part of pan-European consolidation platform strategies.

The Echo deal represents the first venture into the Polish real estate market for Pimco (Pacific Investment Management Corporation).

Legal advice to the buyers has been provided by Weil, Gotshal & Manges, BCLA Bisiorek, Cieœliñski, Adamczewska i Wspolnicy and Dentons.

EY Corporate Finance, EY Doradztwo Podatkowe, MDDP and Stibbe provided tax and accounting support. Colliers International and REAS Residential Advisors were the real estate advisers.

CMS Warsaw Office advised PZU.