Partners signs largest European direct deal

The firm has teamed up with CDPQ and CIC to acquire French property management services provider Foncia in a €1.8bn deal.

Partners Group has teamed up with Caisse de dépôt et placement du Québec (CDPQ) and CIC Capital Corporation on its largest European direct private equity deal to date.

The firm is leading the consortium in the acquisition of French residential property management services provider Foncia in a deal valuing the business at €1.833 billion.

The consortium, which also includes Foncia’s management, are acquiring the business from pan-European private equity house Bridgepoint and listed French investment firm Eurazeo.

CVC Capital Partners, KKR and The Blackstone Group also expressed interest in acquiring Foncia during early rounds of the sale process, according to a source familiar with the transaction. 

According to French media reports, the runner-up bid for Foncia came from another consortium, made up of French investment manager Ardian, Predica, a subsidiary of insurance firm Credit Agricole, and Canadian private equity firm Onex.

The sale will generate a multiple on invested capital of 2.4x and a net disposal gain of around €1.134 billion for Bridgepoint and Eurazeo, according to a joint statement from the firms.

Following the acquisition, Partners Group will hold a majority stake in Foncia on behalf of its clients, and will lead the company’s board, the firm said in a statement.

The transaction is expected to be completed by September 2016, subject to antitrust clearance.

Partners Group is making the investment from several of its funds, including an allocation from the €1.5 billion Partners Group Direct Investments 2012, which closed in February 2014, as well as from several of its client mandates.

Partners Group declined to comment on the exact percentage of the business which would be held by the firm, CDPQ or CIC.

In a statement, Qing Zhang, executive vice president at CIC Capital, said this transaction could be the first of many with Partners Group.

“Joint investment with private markets investment managers and other institutional investors is an important strategy that CIC Capital pursues,” he said. “In future, we anticipate developing more of such opportunities with Partners Group and our other business partners.”

Foncia provides a range of services to residential property owners and tenants, including joint-property management, lease management and rental and transaction services. It also provides ancillary services such as diagnostic solutions, insurance brokerage, asset management and energy brokerage.

Bridgepoint and Eurazeo acquired the majority of Foncia in 2011 in a deal valuing the business at €1.017 billion, each investing €236 million of equity, according to a statement at the time. The pair invested a further €185 million in 2014 to acquire the remaining stake, which was held by BPCE Group.

Foncia has invested heavily in digitally transforming its client relationship and management processes, as well as completing 60 acquisitions in France and internationally, strengthening its presence in its home market and building leading positions in Switzerland and Belgium, Bridgepoint and Eurazeo said.

Since 2011 the company’s average annual revenue has grown by 4.4 percent and average annual EBITDA by 11.3 percent, from €86 million in 2011 to €132 million at the end of December 2015, the pair said.

Today, Foncia operates across more than 500 branches, managing a portfolio of more than 1.8 million properties across France, Belgium, Switzerland and Germany. It employs more than 8,000 people and generated revenues of around €700 million in 2015, Partners Group said.

Partners Group said the consortium intends to continue Foncia’s strategy of consolidation within the fragmented French property management market, develop its offerings in related product areas and accelerate its international expansion.