Investee Company – Deutsche Annington Immobilien GmbH
Investee Company Country – Germany
Investee Company Business Type – Property acquisition company
Type of Financing – Acquisition
Equity Providers – Principal Finance Group (Nomura International plc’s)
Equity Leader (Individual) – David Pascal
Debt Providers – Kreditanstalt fur Wiederaufbau (KfW) and Landesbank Hessen-Thueringen Girozentrale
Debt Type – Structured term loan
Equity Amount – Undisclosed
Total Deal Value – DM7.6 billion
Other Advisors – Schroder Salomon Smith BarneyComment – Formed in 1997 and financed by Nomura International’s Principal Finance Group, Deutsche Annington has spent some three and half years working towards this deal. Nomura was unable to disclose the equity amount involved in the deal, which was financed to the tune of DM1.63 by a structured term loan arranged by Kreditanstalt fur Wiederaufbau (KfW) and Landesbank Hessen-Thueringen Girozentrale. The DM1.4 billion of existing debt remains in place.
This is the first continental European deal for The Principal Finance Group, which focuses on investments in asset-based companies. Previous transactions of this type include the acquisition of a Ministry of Defence married quarters estate in 1996 for £1.7 billion. Annington Homes is Deutsche Annington’s sister company in the UK. This week the Principal Finance Group also announced the acquisition of 988 pubs from Bass PLC.
Guy Hands, managing director of Nomura’s Principal Finance Group, commented: “We are delighted to have concluded our first transaction in Germany and the largest ever private equity deal in continental Europe. In addition, we have now established a successful relationship with two of Germany’s leading lenders.”
Negotiations for the sale of the rail workers homes, which is the first large scale privatisation of real estate to take place in Germany, began in 1997. The deal was initially awarded to a German consortium whose bid was DM1 billion less than Deutsche Annington’s original offer. The Railway workers’ Union opposed the sale and it was postponed until after the general election in October 1998. Following intervention from the European Competition Commissioner the German government reopened the bidding process. The deal, which was closed this week, was signed in December last year.
Guy Hands added: “We also look forward to fulfilling our social obligations under the terms of this deal and to providing the opportunity for the tenants to benefit from the potential of home ownership for the first time.”