Aelca Locks Horns with its Owner Värde Over Sareb Mega-Contract

12 June 2018 – Voz Pópuli

An underground war in the heart of Aelca, one of the largest property developers in Spain. The real estate firm founded by José Juan Martín and Javier Gómez is immersed in negotiations regarding a possible alliance with Sareb which has generated unease for its main shareholder, Värde Partners, which owns 80% of the share capital.

Sources at the US fund consider that their investee company is negotiating this agreement behind their backs, something that they are opposed to since it could mean that their stake in the property developer decreases to less than 50%, according to financial sources consulted by Voz Pópuli.

Sources at the property developer declined to comment: “Aelca is continuing to work on the project with Sareb. In this sense, we decline to make any comment”.

Meanwhile, Värde Partners has been assessing a possible merger between Aelca and Vía Célere, the fund’s other property developer in Spain, for some time. They see it as the best way to generate value from their investments in Spain ahead of a possible IPO when the market improves. But neither of the US fund’s partners like the merger option, they would both prefer to continue on their own.

Sareb’s process

The property development alliance with Sareb is making progress, with the recent selection of just two finalists: Aelca and Aedas. The President of the bad bank, Jaime Echegoyen, said yesterday that his entity is in no hurry to close an agreement and nor does it have any obligation to close a deal if the numbers do not work out in the end.

Sareb’s idea is to include land worth €800 million in the agreement. According to financial sources consulted, developments in progress worth another €500 million may also be included. And of all of that, Aelca would want to hold onto around €900 million, or 70% of the total.

One of the options being negotiated is that Aelca and/or Aedas acquire the plots in exchange for allowing Sareb into their share capital. The valuation of the property developer is around €1 billion, and so such an agreement would reduce Värde’s stake to below 50%. Even so, according to the same sources, Aelca would have to obtain approval for the operation at the General Shareholders’ Meeting, which would be tricky if the fund is not in agreement.

Moreover, sources at Värde do not think that the valuations that they are seeing for the possible agreement with Sareb are justified, and they fear that the negotiations will dilute their stake (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

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