Bain and Cerberus Vying to Take Over Hercesa

27 April 2018

The company, which has more than forty years of experience in the sector, has already attracted the interest of the two investment funds, which would take over a business structure that has a presence in all market sectors.

A long time player in the Spanish real estate market has put itself up for sale. The Hercesa Inmobiliaria group, which has more than forty years of experience in the sector and which has a presence in all market sectors, has received offers for the company starting at 150 million euros. Up to five investment funds have already expressed an interest in the compan. Bain and Cerberus are considered the two principal contenders, industry sources told EjePrime.

The group, of which the Cercadillo family is the majority shareholder, set a deadline for the submission of applications that ended today. That will be followed by analyses of the company, due diligence and negotiations. The company commissioned KPMG for its valuation prospectus. The group declined to comment on the sale.

Hercesa’s real estate activity is primarily focused on the residential sector, although it also has industrial, tertiary and management assets in its portfolio. Also, the company has had a presence outside of Spain since 2004, having carried out projects in Portugal, Romania, Bulgaria, the Czech Republic, Poland, Morocco, Ecuador, Mexico and Panama.

In the residential market, the holding also owns the manager Hi! Real Estate. Created in 2014, it is the base of the group, which in its forty years of experience has delivered more than 21,000 homes and, at present, is selling 2,600 properties in developments distributed between the Community of Madrid, Malaga, Valladolid and Guadalajara, where its headquarters are located.

However, one of the company’s assets that may of the greatest interest for the funds who want to develop in Spain is their portfolio of land mortgaged with banks. Hercesa has land holdings throughout the Spanish Levant, Andalusia, Madrid and Guadalajara.

In addition to the manager, the group has a developer, Hi! Projects, as well as with the construction company Hi! Works and Services. The last known audit of the group, from 2016, shows revenues of 63.6 million euros and assets of €132 million. Also, the prospectus prepared by KPMG highlights a financial debt of fifty million euros, much of it related to the land mortgaged with banks, with which it has recently reached agreements for the creation of developments on the lands, due to the rebound of construction in the residential sector.

As EjePrime has learned, the company’s intention with this valuation prospectus is to sell the company by taking advantage of the upward cycle that the sector is experiencing and from which the investment funds want to take advantage. It would be, therefore, a new corporate operation in which, just as happened with Via Célere, which received an injection of funds from Värde, the future buyer could keep the current management team.

There have been other such agreements, such as the purchase of Aelca, also by Värde and Cerberus’ acquisition of Inmoglaciar. Also, Bain recently paid 220 million euros for Habitat and Baupost entered the prime residential sector with its purchase of Levitt, through Q21.

Original Story: EjePrime – J. Izquierdo

Translation: Richard Turner

 

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