Tag: minority shareholders

Torreal, KKR & ProA May Force La Caixa To Sell 100% Of Saba

10 November 2017 – Expansión

The European parking lot market is at boiling point. Following the sale of Empark earlier this year to the Australian fund Macquarie, now comes the turn of Saba, the other Spanish leader in the sector, controlled by Criteria (La Caixa). According to financial sources consulted, the firms KKR, Torreal and ProA, which together own 49% of the company, have resumed the plan to sell their shares. Unlike in previous processes, on this occasion, the conversations with investors revolve around the sale of 100% of the company, given that, by agreement between the shareholders, they may force La Caixa to sell its controlling 50.1% stake.

According to preliminary estimates, the valuation of the company could reach €1,150 million. Until last December, the company’s financial debt amounted to €545 million. Sources at Saba declined to comment on the news.

The parking lot group closed 2016 with turnover of €222 million, compared to €225 million in 2015, when its revenues still reflected income from its logistics parks. The company, a spin-off of Abertis, constituted in 2011, obtained an EBITDA of €103 million and earned €4 million from its ordinary activity in 2016 (€32 million with the gains from the sale of its logistics business to the Socimi Merlin).

Two hundred thousand parking spaces

The group manages 195,000 parking spaces across Spain, Chile, Portugal and Italy and employs 1,400 people. Its last major operation was the contract it won in 2014, with a bid amounting to €234 million, to manage the parking lots in Barcelona through a joint venture with the city’s Town Hall.

Potential buyers for Saba include the large investment funds that specialise in infrastructures. Sources in the market say that the investment firm Arcus, which manages a portfolio of assets worth €17,000 million, is looking at this opportunity. KKR, Saba’s third-largest shareholder, purchased the parking lots of the Dutch firm Q-Park earlier this year for almost €3,000 million. Meanwhile, Ardian and Predica also put the French market leader Indigo up for sale this year; that company has strong interests in Spain and is worth around €3,000 million.

There have been other smaller transactions in Spain, such as the agreement signed by Oak Hill to acquire Isolux’s best parking lots and the sale of Parkia to First State for €300 million.

Saba, which is chaired by Salvador Alemany, suffered a major setback this summer after losing the bid for Empark. The parking lot group, whose vocation since its constitution has been to make its debut on the stock market, had wanted to absorb Empark to acquire critical mass for its stock market debut. But its offer was lower than the one presented by the Australians, which, according to the market, bid around €900 million.

Following that setback, the minority shareholders have reactivated the sales plan. Specifically, the shareholders’ agreement lapses in November and the funds have a drag along clause to force the other shareholders to sell. The timeframe for looking for interested investors runs until May 2018 and if Criteria does not want to sell, then it has the right of first refusal to buy the shares that it does not control at the same price agreed with the investor (…).

Original story: Expansión (by C. Morán, I. Abril and M. Ponce de León)

Translation: Carmel Drake

MAB Introduces Tougher Entry Rules For New Socimis

31 July 2017 – Expansión

In August, an amendment to the regulations governing the Alternative Investment Market will enter into force, which has led to a wave of Socimi debuts on the stock market in July to circumvent the new requirements.

Six new Socimis debuted on the stock market in July, an unusually high level of activity compared to previous months. The reason is that on 1 August the new circular published by the Alternative Investment Market (MAB) will enter into force. It introduces changes for debuting on the stock market and will affect all companies wanting to list from next month (August) onwards, in particular, Socimis. The amendment sees a toughening up of the conditions to debut on the stock market, given that it imposes some very demanding requirements for minority shareholders.

The change is very specific: “At the time of listing, companies must have minority investors owning shares that are worth less than €2 million or 25% of the company’s share capital”, explained José Luis Palao, Partner of the Mercantile Department at Garrigues. Minority shareholders are considered to be those that hold less than 5% of the share capital. Until now, the regulations allowed companies a grace period of one year to fulfil this requirement.

Manuel López, Partner of Financial Regulatory Law at Ashurst, considers that some Socimis have formed closed-end funds of sorts that have no interest in allowing access to minority shareholders. The exception to the regulations that existed benefitted this type of company in particular, as they enjoyed additional time to adapt themselves.

In this sense, López understands that the regulations are reasonable and reflect what the Socimis are designed to be – entities with the vocation to expand and attract new investors, aimed at boosting the real estate sector. His colleague, Ismael Fernández Antón, Partner of Real Estate Law at the same firm, considers that “the legislation has not become less flexible, but rather more coherent”.

Although Circular 1/2017 does not explain the reasons for the change, the experts agree that the market for Socimis has reached maturity and does not require any further encouragement. The MAB was prudent at the beginning, offering these companies a certain amount of freedom to promote their growth. Fernández Antón says that “this measure was always going to have a sell-by date”, given that the Socimis already represent an attractive vehicle for real estate investment in Spain. Moreover, the modification represents a guarantee to “limit the desire to use them as a platform for pure fiscal optimisation”, says López.

The change only affects companies that start trading from August, in such a way that those that have debuted recently still benefit from the exception. This has meant that, in the last month, the rate of Socimi debuts on the stock market has multiplied. Those who have acted quickly can enjoy a period of one year to fulfil this requirement regarding the diffusion of shareholders.

Although almost 40 Socimis trade on the stock market, only five are listed on the Main Exchange and only two of those form part of the Ibex 35: Merlin Properties and Colonial. Within the last few days, the entities Numulae, Bay Hotels & Leisure and AM Locales have all debuted on the MAB.

Original story: Expansión (by Jesús de las Casas)

Translation: Carmel Drake

Saba Wants To Complete A Major Purchase Before Its IPO

1 June 2017 – Expansión

Saba is analysing several major operations with the aim of growing in size before it debuts on the stock market, according to the plans that the company’s President, Salvador Alemany (pictured above, right) outlined yesterday, at the car park group’s General Shareholders’ Meeting.

“We are looking at operations that would allow us to grow significantly and which would take several months or years to complete; afterwards [with our debut on the stock market], we would see the results of all of the efforts that we have been making since 2011”, said Alemany yesterday, in response to two questions from the company’s two minority shareholders. For the time being, there is no specific timetable for the firm’s debut on the stock market – Saba set itself the objective at the same time that it was carved out from Abertis in 2011.

The CEO of Saba, Josep Martínez Vila (pictured above, left), confirmed that Empark is one of the operations under analysis, but that there are also others in the running. The advantage of acquiring that firm stems from the fact that it would allow Saba to double in size; by contrast, it would mean concentrating its business even more in Spain, which last year accounted for 71% of its turnover.

The group closed 2016 with turnover of €202 million, compared to €225 million in 2015, a year when it was still recording revenues from its logistics parks. Saba, which yesterday approved the distribution of an issue premium amounting to €20 million, earned €4 million from its ordinary activity, a figure that increases to €32.36 million with the profits from its logistics business.

The company, which was just awarded the contract to manage 12,000 parking spaces in three shopping centres in Chile, has also just agreed with the banks to improve the conditions of a €465 million loan.

Original story: Expansión (by A. Zanon)

Translation: Carmel Drake

Lone Star Will Sell Up To 60% Of Neinor When It Goes Public

8 March 2017 – La Vanguardia

On Monday, the US fund Lone Star announced its intention to initiate the flotation on the stock market of its Spanish subsidiary, the property developer Neinor Homes, with the sale of up to 60% of its shares. Neinor, which is due to debut on the stock market in April, will thereby become the first property developer to go public following the outbreak of the real estate crisis in 2007.

Market sources explained that Lone Star is valuing Neinor at around €2,000 million. The fund acquired the former real estate subsidiary from Kutxabank in 2014 for €925 million and then invested another €200 million in a capital increase in order to purchase land: with a cumulative investment of €1,100 million, the debut will allow the fund to capitalise on its commitment to the Spanish real estate sector in record time.

The property developer led by Juan Velayos (pictured above) explained in the preliminary documentation sent to the CNMV that the stock market debut will be performed in two phases. During the first phase, the firm will make a primary offer or IPO aimed at institutional investors, through which it hopes to raise €100 million, which it will use to reduce its corporate debt. It will then carry out a secondary offer, by selling shares that are currently held by Lone Star’s minority shareholders.

According to Neinor, the placement will leave between 40% and 60% of the company’s share capital as free float. Lone Star and the company itself have made a commitment to not undertake any additional sales of its shares for 180 days, whilst the management team led by Juan Velayos, the former CEO at Renta Corporación, has extended that commitment for a period of between one and three years.

Neinor owns land for the construction of 161 developments and 9,086 homes: as at December 2016, those plots had a gross value of €1,120 million and a gross development value of €2,548 million, which guarantees the company’s activity until 2021.

Since its creation, the company has been planning its IPO, applying standards of corporate governance, professionalisation and customary transparency in listed companies. Based on the valuation of €2,000 million that the placement firms are entertaining, Neinor will become the third largest real estate company on the Spanish stock market, behind only Merlin (with a capitalisation of €5,000 million) and Colonial (€2,450 million) and ahead of Hispania (€1,300 million) and Axiare (€980 million).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

RE Broker Aguirre Newman Goes Up For Sale

20 February 2017 – El Confidencial

Spain is experiencing a real estate boom once again and brokers want to take advantage of the situation to make money.

Whilst last year, the private equity fund Cinven acquired Tinsa, the largest appraisal company in the country, and in 2015, Apax Partners took control of Idealista, this year, Santiago Aguirre Gil de Biedma, the brother of Esperanza Aguirre, has decided to put Aguirre Newman, the largest real estate broker in the sector, up for sale.

According to financial sources, Santiago Aguirre has engaged Atlas Capital to sell his majority stake in the consultancy firm. The firm will target both individual and institutional investors, as well as public and private corporations. Aguirre Newman caters for all real estate investment-related matters and offers a complete set of services including valuations, feasibility studies, appraisals, attending compensation boards, leases, property management and technical architectural services.

The company generates annual revenue of around €80 million, with an operating profit of EBITDA of almost €12 million. As such, the financial sources consulted consider that Aguirre Newman could be sold for between €80 million and €100 million. Other sources consider that some of the parties that may be interested in purchasing this real estate broker include the private equity funds Cinven and Apax Partners, which could enlarge the businesses of Tinsa and Idealista, respectively, with this acquisition.

However, the same sources also consider that this could be a good opportunity for some of the main domestic competitors, which would result in a certain degree of concentration in what is a very fragmented sector. In addition to Aguirre Newman, the other large consultancy firms include CBRE, Knight Frank, JLL, BNP Paribas Real Estate, Cushman & Wakefield and Savills. These seven firms account for 90% of the sector’s revenues in Spain and employ 2,200 professionals in total. Almost 400 people work for Santiago Aguirre and his minority shareholder partners.

Low interest rates, the collapse in prices following the crash, the enormous volume of liquidity and the recovery of the Gross Domestic Product (GDP) in Spain have created a cocktail that has led to investment figures not seen since the era of the bubble. According to a report from JLL, non-residential real estate investment (offices, retail, logistics and hotels) amounted to €8,707 million in 2016. That figure represents a decrease of 8% compared to 2015, when operations worth €9,407 million were closed. Nevertheless, the figure recorded in 2016 was still higher than the maximum recorded in 2006 (€7,800 million).

Golden years

Last year, the most active market in terms of investment volume was the retail premises and shopping centre segment (retail), with €2,977 million, down by 3% compared to 2015. (…). Moreover, Aguirre Newman highlights that this figure exceeded the €2,000 million threshold for the third year in a row, which is clear proof of the boom in the real estate sector, especially in retail, which accounts for 35% of all tertiary investment.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Three Minority Shareholders Acquire Petit Palace Hotel Chain

19 September 2016 – Cinco Días

The Choice Hotels chain has had the doors to the Spanish hotel market closed in its face. The US group signed a pre-agreement with N+1 in July whereby the investment bank committed to sell its 52% stake in High Tech. Several minority shareholders then also joined the agreement, which is due to expire on 30 September.

However, three of the chain’s minority investors have opted to exercise their right of first refusal and acquire shares from other investors. In this way, on Friday, N+1 announced the sale of 26% of the company that it held through N+1 Dinamia Portfolio II, an operation that, excluding expenses, amounted to €9 million, given that it had valued its stake at €0.

Besides that stake, the investment bank also held another 26% stake in High Tech through several private equity funds, which it has also divested, according to sources familiar with the operation.

The three minority shareholders that now control High Tech are: Inversiones el Piles, an Asturian company that also owns 24.5% of Duro Felguera. It used to own 10% of the hotel chain, but now controls 54%. Alongside it is the company Edificio Miño, a private investment fund linked to one of the shareholders of Seguros Santa Lucía, which previously held 6.5% and now holds 11%; and General Oilex Company, the real estate group originally from Sweden, which has increased its stake from 5% to 35%.

These three investors, which have paid around €40 million for the 78.5% of the company that they did not control, have taken on all of its debt. They had been given the option to exercise their right to accompany the other investors in Choice’s offer or to exercise their right of first refusal; they opted for the latter.

The operation represents N+1’s exit from the hotel chain’s share capital, after it first became a shareholder in 2003. It also sees the departure of the founding executives of the company, which together held a 26.2% stake. On several occasions, some of the founders, such as Antonio Fernández and Javier Candela, expressed their interest in regaining control of High Tech, due to differences in terms of management and they tried to look for financial support from other investment funds. As such, over the last year, they have sounded out buyers including Hotusa.

High Tech operates 31 hotels in Spain, through the Petit Palace brand; it rents the majority and manages the rest. The chain has a strong presence in Madrid, where it manages 20 properties, as well as in Barcelona, Valencia, Sevilla, Bilbao and Málaga. In total, it has 1,966 rooms.

High Tech was launched 15 years ago by the team from Tryp, following the sale of that brand to the Escarrer family (Meliá). The founding team, which the other shareholders subsequently joined, created an urban brand, which suffered during the years of the crisis due to the high price of rentals and high financing costs. Sources in the market suggest that the new owners may be interested in valuing the company for its subsequent sale.

Original story: Cinco Días (by Laura Salces)

Translation: Carmel Drake

Metrovacesa Creates RE Developer With Assets Worth €1,040M

27 November 2015 – Expansión

The real estate company Metrovacesa, controlled by Santander (owner of 72.5% of the share capital), BBVA (19.4%) and Popular (7.9%) is going to be divided into two companies.

The historical real estate company has announced a demerger project, which was approved by the Board of Directors on 24 November and which will be presented to the ordinary shareholders’ meeting for approval on 29 December.

The project includes the creation of a new company into which Metrovacesa will place its land and home development businesses; meanwhile, the existing company will continue to hold the properties linked to its real estate business, in other words, the offices, shopping centres and homes that generate rental income. “We are looking to carry out a business restructuring process to add value to the company, as well as a potential refinancing of our financial liabilities, to ensure the feasibility and profitability of the businesses in the future, by separating out the property business from the land and home development businesses”, explains the company.

The new company, called ‘Metrovacesa Suelo y Promoción’, will be 100% owned by the current shareholders of the real estate company, in “exactly the same proportion as their existing stakes in Metrovacesa”. The company led by Rodrigo Echenique will create a new company with assets worth more than €1,040 million. “The new company will issue 3,075 million new shares, with a nominal value of €0.16 – a total share capital of €492 million – with a premium of €547.8 million, taking the total value to €1,039.85 million”.

Three capital increases

To create the new company, the Board will propose three successive capital increases to its shareholders. The first one will be non-cash and will involve “specific major shareholders”, which will contribute “assets that will form part of the company’s equity”. The second will involve the capitalisation of financial loans, leaving the new company with hardly any debt; and the third will take place to ensure that there is no dilution of the minority shareholders’ stakes. “In the event that the capital increases are fully subscribed, Metrovacesa’s share capital would amount to €1,261 million”.

Following the demerger, the real estate company will have share capital amounting to €769 million, in other words, around 61% of its current value, and the remaining 39% will be transferred to the new company. The real estate company indicates that its indebtedness is associated “primarily” with its property business and a “significant” portion of it is due to mature in Q3 2016, which it will be able to refinance more effectively following the execution of this process.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Merlin Completes Its €1,000M Capital Increase

7 August 2015 – Expansión

Demand for the Socimi’s capital increase exceeded supply by 8 times.

The Socimi Merlin Properties has successfully completed a capital increase amounting to €1,033.7 million – the company intends to use the funds to finance its purchase of Testa, the real estate subsidiary of Sacyr.

According to a statement issued by Merlin to Spain’s National Securities Market Commission (CNMV), 129.21 million shares were subscribed in total, after demand for the capital increase exceeded supply by 8 times, during the preferential subscription period and the period for assigning additional shares.

Merlin launched a takeover bid for 100% of Testa’s share capital on 23 July, after taking a 50.1% stake in the real estate company and acquiring an additional 25% stake in the company from Sacyr for €861 million.

The takeover, which was obligatory, as it exceeded the quota of 50% of the share capital, is effectively aimed at just 581,609 of Testa’s shares, which represent the 0.38% stake of its capital that is listed on the stock exchange.

Merlin is offering these minority shareholders €13.54 per share, the same average price at which the Socimi will acquire 100% of Testa, which is 1.7% higher than the company’s current share price (€13.31 at the close of trading on Wednesday).

The Socimi will thereby exclude Testa from the stock exchange, since it plans to merge the two companies (Merlin and Testa). To do so, it will have to first convert Sacyr’s current subsidiary into a Socimi – that step is expected to be completed before the end of September.

All of this forms part of an agreement that Merlin reached with Sacyr at the start of June, to purchase Testa in several stages over a maximum period of one year, for €1,793 million.

The operation will result in the creation of the largest property company in Spain, with assets worth €5,000 million, including one of the four skyscrapers in the Cuatro Torres business district of Madrid.

Original story: Expansión

Translation: Carmel Drake

New Hotel Socimi ‘Obsido’ To Debut On MAB In Sept

5 August 2015 – Idealista

Obsido Socimi, whose portfolio of retail assets is concentrated in Málaga, is set to become the next Socimi to list on the stock market in Spain; and it will do so in September, with a market value of €21.39 million….and a share price of €19.40.

Following the recent debuts of the Socimis owned by Blackstone and Deutsche Bank, Obsido will become the seventh Socimi to list on the Alternative Investment Market (‘Mercado Alternativo Bursátil’ or MAB). (…).

According to the company’s prospectus, Obsido Socimi is backed by Spanish and Norwegian capital. Håkan Tollefsen controls a 33.165% stake in the company (365,683 shares), as does Joaquín Hinojosa, whilst the Obsido Group, the parent company, holds a 0.26% stake (2,850 shares) and the other minority shareholders own the remaining shares (33.41%).

The company, which has the support of Armabex as the registered advisor and Banco Sabadell as the liquidity provider, has focused its real estate portfolio on Málaga, specifically two hotels in Marbella, according to Antonio Fernández, President of Armabex.

“All of the properties in the company’s real estate portfolio are located in the province of Málaga. As a result, the company’s business depends to a large extent on the overall economic conditions in the province and on demand for hotels in that area in particular”.

The seventh Socimi to list on MAB

Obsido is the seventh Socimi to debut on this exchange, which is also home to small companies looking to obtain financing to accelerate their expansion and SICAVs (the investment vehicles used by high net worth individuals).

The most recent Socimi to list on MAB was Trajano Iberia, owned by Deutsche Bank, which debuted on 30 July,… In addition, Entrecampos, Mercal Inmuebles, Promorent, Uro Property and Fidere (Blackstone’s Socimi) complete the line-up of Socimis listed on this alternative investment platform.

One thing is certain, Obsido will not be the last Socimi to debut on this market. In fact, analysts expect that the MAB will receive a new wave of Socimis after the summer.

Original story: Idealista

Translation: Carmel Drake

Investment Banks Underwrite Merlin’s Upcoming Capital Increase

8 July 2015 – El Economista

The negotiations between Greece and its creditors have caused most Spanish companies to suspend all debt and equity transactions for the time being…But Merlin Properties is one of the few firms that will dare to raise capital this month. According to sources close to process, the Socimi will not delay its planned €1,000 million capital increase, scheduled for the second half of July, as the participating banks have agreed to underwrite the operation.

The agreement is effectively an insurance contract that Merlin has signed with the bank leading the operation – Morgan Stanley is the global coordinator – to safeguard its capital increase. As a result, the financial institutions undertake to acquire the Socimi’s shares in the event that they cannot be placed in the market during the established timeframes.

The company has paid for this contract to ‘cover its back’, given the importance it places on raising this capital. Merlin needs the money to continue to finance its acquisition of Testa, the real estate subsidiary owned by Sacyr, for which it will disburse €1,793 million in total.

In fact, it also signed a contract with the underwriting banks for its first capital increase, which it completed last month, amounting to €613.7 million, to secure the operation. (…).

As a result of that capital increase, the Socimi obtained financing to afford the purchase of the first instalment of 25% of Testa. The second phase of this acquisition, whereby Merlin will acquire another 25% of the real estate company, is scheduled for July. As such, the timetable for the capital increase must be adhered to so that the second phase can be closed within the next few weeks.

The final phase in the acquisition of Testa will be completed before 30 June next year. By that date, Merlin will own almost all of the shares in the company, with the exception of 0.4% held by minority shareholders. The plan is to merge both companies before the end of next year, into a single Socimi.

To this end, Testa must first be converted into a Socimi, and before 30 September – the deadline for the company to be able to obtain tax benefits under this framework.

The €1,000 million inflow will represent a capital increase of 47%, since the company is currently worth €2,107 million. The terms of the operation are not yet known, but a discount is expected to be offered. For now, analysts assign Merlin a “buy” rating. (…)

Original story: El Economista (by Isabel Blanco and Alba Brualla)

Translation: Carmel Drake