Northstar moves into RE through debut deal

The Singapore-based private equity firm has made an investment in Singapore’s largest real estate brokerage in a deal valued at $103 million.

The Northstar Group, the $1.2 billion Southeast Asian private equity firm, has made a foray into real estate by leading the management buyout of Singaporean brokerage firm ERA Real Estate, according to a joint statement.
Details of the deal were unconfirmed, but local media reports have valued the deal at S$130 million (€77 million; $103 million), and that price is understood to include some leverage. ERA’s management team and Northstar were both part of the deal, but it is understood Northstar provided the bulk of the capital.
ERA Real Estate is Singapore’s largest brokerage firm, completing 44,000 sales transactions with a total property value of S$22.3 billion in 2012 alone. The firm is focused primarily on the residential sector.
The seller was Hersing Corporation, a Singapore-listed brand manager and service provider for franchises such as children’s furnisher Casa Kidi and money transfer service Western Union. Along with the sale, Hersing also signed a non-compete agreement with Northstar in order to give the private equity firm more room for expansion, according to the statement.
Northstar has created a separate vehicle, Realty Partners Group, out of its existing funds to act as the holding company for this transaction. It was not disclosed exactly which of Northstar’s funds  provided the equity for the purchase. 

The firm has raised three private equity funds since its inception. They are the $110 million Northstar Equity Partners, closed in 2007; the $285 million Northstar Equity Partners II, closed in 2010; and the $820 million Northstar Equity Partners III, which closed in 2011, according to the firm’s website.
Ashish Shastry, Northstar managing partner and chairman of its Realty Partners Group, said in the statement: “We aim to re-list ERA as a ‘pure-play’ real estate brokerage firm on the Singapore Exchange, within the next two to three years.”
The statement also added that Northstar is in the process of acquiring ERA’s Asia Pacific Master Franchise, which has a presence in 18 countries across Asia. That deal is still waiting for the master franchisor’s approval.

Northstar declined to comment on any further details.

Northstar has a long standing partnership with TPG Capital through a share swap agreement. In May, the partners exited their stake in Indonesian commercial bank BTPN to Sumitomo Mitsui Bank for 7 times the money, Private Equity International reported earlier.