German asset manager Patrizia Immobilien has continued its European acquisition spree with the takeover of London-based independent fund manager Rockspring Property Investment Managers.
The acquisition, Patrizia's third significant buy since the summer following the purchase of Triuva and Sparinvest, provides the Augsburg-based firm with a London-based fund management hub focused on discretionary capital for global clients.
The deal lifts Patrizia's assets under management from some €18 bn at the beginning of the year to around €40 bn, cementing its position as one of Europe's top 10 largest real estate fund managers.
'Rockspring has an outstanding track record and reputation for European property fund management and client services and is a perfect fit for Patrizia in terms of shared vision and culture and its focus on real estate business. This acquisition represents an important milestone for Patrizia in achieving our vision to become a global provider of European real estate assets for our clients,' said Wolfgang Egger, CEO of Patrizia Immobilien.
Also see, MAGAZINE Patrizia enters Europe’s top-10 league of investment managers
Egger said that Rockspring's global client base is 'complementary' and 'will allow both sides to profit from long-lasting trusted relationships which have been built on long-term performance'. 'Patrizia has been preparing for the acquisitions of Rockspring, Triuva and SPI in a careful and strategic way for several months now and I’m delighted that we have been able to finalise each of them this year. It represents a unique strategic opportunity to be able to bring the three businesses into Patrizia in one comprehensive integration process,' he added.
Rockspring CEO Robert Gilchrist explained that the company started to think about the future and its next phase of growth earlier this year. 'Patrizia is a strong fit, both culturally and strategically for Rockspring’s professionals; we share a similar vision, personality and strong entrepreneurial energy that will continue to differentiate us from competitors. Importantly, the deal will also ensure an uninterrupted continuation of our current business, managed by the same key people within the Rockspring team.'
Since its founding by Richard Plummer in 1984, Rockspring has established a client base in excess of 120 institutional investors across 20 countries, as well as fund brands including Rockspring TransEuropean, Rockspring PanEuropean and Rockspring Hanover – all of which will remain unaffected and will continue in their current form post-merger. Its 110-strong team manages €7.9 bn of real estate investments primarily in the retail, office and industrial sectors out of seven offices in Europe. Rockspring’s AUM is split between the UK and Ireland (35%), Germany (34%) and France (13%), with the remainder (19%) spread throughout the rest of Europe.
Rockspring complements Patrizia’s fundraising capabilities with 31% of its institutional investors originating in the UK, 27% from the Asia Pacific region, 5% from North America and the remaining 37% from continental Europe whereas the majority of Patrizia’s clients originate in Germany. Around 80% of Rockspring’s investors are pension funds, while it also counts insurance companies and other institutional investors amongst its clients.
The Rockspring transaction is expected to close at the end of the first quarter of 2018 at the latest and to be earnings accretive in the year of acquisition.
M&A track record
Patrizia has a track record of mergers and acquisitions. In 2010 it took over LB Immo Invest, at the time one of Germany’s largest providers of institutional real estate funds. In 2012, it bought London-based Tamar Capital Group, a real estate investment and asset manager with assets across continental Europe and teams on the ground in London, Dublin, Berlin and Paris.
In October of this year Patrizia, which is majority owned by CEO Egger, acquired Copenhagen-based Sparinvest Property Investors (SPI), a global real estate fund of funds investment manager in the small- and mid-cap segment. SPI manages four real estate funds with equity commitments totalling €1.5 bn and has over 20 Nordics-based institutional clients.
A month later the company emerged ahead of shortlisted bidders DIC Asset and Hamburg Trust as the buyer of German institutional real estate fund management business Triuva. The purchase price for what was formerly IVG Institutional funds was not disclosed but the vendor, the restructured IVG business, said the transaction reflects the fair value of the company.
‘Our strategy includes both organic growth of at least €2 bn per year, and growth through M&A where we have the liquidity to pursue opportunities that fit culturally and strategically with Patrizia,’ COO Klaus Schmitt recently told PropertyEU.
Patrizia revealed earlier this year that it had significant firepower for acquisitions, with around €740 mln in cash available ‘to take advantage of future opportunities’. The company’s aggressive M&A activities reflect the group’s willingness to become ‘the global provider of European real estate assets’. In 2016 the company raised a total of €2.2 bn of equity, only €400 mln of which from investors outside Europe. This is expected to change in the future. ‘Our long-term aim is to raise equal capital from our core Germany market and the rest of the world,’ Schmitt commented.
