Four Funds in The Shortlist to Buy Fidelidade Real Estate. Insurer Hopes to Raise Over €400 Million

26 January 2018

Four funds, one of which is Portuguese, are interested in the 277 properties that the insurer has for sale. Fidelity expects to raise more than 400 million euros from the sale.

Fidelidade has put a “For Sale” sign on 277 properties… and it has already winnowed the potential buyers down to a short list of four. Four funds, one of which is Portuguese, will now have access to detailed information on the portfolio and then submit binding offers, ECO learned. The transaction is expected to raise more than 400 million euros for the insurer led by Jorge Magalhães Correia, which will contribute to strengthening its solvency and facilitating investment in other projects.

The North-American funds Oaktree Capital Management and Apollo Global Management, along with the European fund Orion Capital Managers and Portugal’s Coporgest were chosen by Fidelidade to present their final proposals, according to ECO. The interested parties had until November 17 to make a preliminary assessment and submit their non-binding purchase offers. There were more than two dozen participants in the first phase, and only these four funds made it to the shortlist.

Fidelidade has not limited itself to analysing the possible bids by the would-be buyers. The insurer also had the aim of warding off investors who were only interested in gaining access to confidential data related to the real estate on sale, while also seeking to ensure that it finalises the deal with a fund that is already present in the Portuguese market or has partnerships with real estate agencies.

With this sale, which should be completed by the end of the first semester, the insurer expects to increase its solvency level to the 150% to 160% mark (should the sale yield the more than 400 million euros), against the current ratio of 140 %, in order to improve their financing capacity. As the level of solvency increases, investors’ risk assessments of the firm grow more favourable, allowing the company raise financing at lower costs.

Half of the properties are in Lisbon

More than half (51%) of the assets are located in Lisbon, and 12% are in Porto. The rest are scattered throughout Portugal, including properties on the archipelagos of the Azores and Madeira. Many of these properties are under vertical ownership. Outside of the deal are buildings that are in use by Fidelidade and its distribution network (stores and agents).

“There are many good assets for real estate development,” an area in which Fidelidade does not have specific skills, says Jorge Magalhães Correia, president of the insurance company. Together with the divestment, the insurer will adopt a real estate investment strategy focused on larger, emblematic buildings. Fidelidade will, moreover, establish a real estate asset management company to professionalise the management of their remaining assets.

Original Story: Economia Online – Rita Atalaia & António Costa

Translation: Richard Turner