3i and Bank of Scotland back £375m MBO of Fairview Holdings

Another public to private move by a property company produces 3i’s biggest deal this year.

Private equity firm 3i and the private equity arm of Bank of Scotland have backed management in an approved cash offer of £375m for property group Fairview Holdings. The two firms have taken an 80 per cent stake in the company established for the take-over bid. The plan is to reduce the company's assets down to a smaller estate, by buying less land than it is selling.

The deal was backed by £287m of debt provided by Lloyds TSB, Bank of Scotland, Barclays and Royal Bank of Scotland. Alex Williams, an investment executive at 3i, said: “It is fair to say that Fairview has felt unloved by the market, just because of the sector it operates in. That has frustrated the management team.” 3i has ruled out refloating the firm and expects to sell a smaller company back to the management, who have a 20 per cent interest in the company at present.

Dennis Cope, who founded the company in 1961, leads the management team. He said: “This investment by 3i reflects confidence in our prospects and will allow us to maximise our potential in the London property market.” “We have consistently maintained a strong financial performance, even through periods of economic slowdown. We are now looking forward to building on our success and continuing to work as an independent business.”

3i has been involved in a number of public to private deals. In November, was Peter Black Holdings, which supplies goods to retailers, in a £307m deal. Bank of Scotland has also been involved in backing a number of public to private opportunities in the housebuilding sector – most recently Linden Homes and Cala Homes.