PE trio seals A$1.22bn deal

TPG, PAG and Ontario Teachers have agreed to buy Australian property services company DTZ.

Private equity firms TPG and PAG are joined by Canadian pension fund Ontario Teachers’ Pension Plan in an agreement to acquire DTZ for A$1.22 billion ($1.14 billion; €841 million), according to a statement.

The deal, which sees the global property services business sold by its Australian owner UGL, remains subject to regulatory approval and is expected to close by the end of September 2014.

Former chief executive of global property services firm CBRE, Brett White, is joining the buyout and will sit on the board of directors before becoming executive chairman of DTZ in March 2015.

DTZ, a UK-headquartered business, was placed into administration and delisted in December 2011, the trading entities immediately being sold to support services group UGL, media reports said at the time. UGL repaid £77.5 million ($131 million; €96.8 million) of DTZ's £106 million of debt to Royal Bank of Scotland.

Three years later, the company now has annual revenue in excess of $2 billion, according to the statement.

“We see a great opportunity in commercial real estate services to create a best-in-class firm servicing clients on a global basis. We believe DTZ is well progressed on this path, and that together with our co-investors we can accelerate the evolution of its strong platform,” Ben Gray, managing partner of Asia at TPG, said in a statement.

Weijian Shan, PAG group chairman and chief executive, added, “DTZ has impressive resources and capabilities in Greater China, Western Europe, Australia, Singapore and North America. In particular, we believe that DTZ holds the market leading position in Greater China, the world's fastest growing services marketplace.”

The deal comes just a month after TPG managed to close its sixth Asia-focused vehicle on $3.3 billion – below its already reduced $3.5 billion target.

The firm had struggled to raise the vehicle, having experienced high turnover in recent years at its senior management level, which included the departure of PAG’s Shan in 2010.

Its capital raising activities picked up during 2014 when the firm reorganised its team, transferring Tim Dattels from San Francisco to Hong Kong to co-lead TPG’s Asia efforts with Ben Gray, and hiring Datuk Ganen Sarvananthan from Malaysia’s sovereign wealth fund Khazanah Nasional Berhad where he was head of investments and executive director.

Despite the difficulty in fundraising, TPG has been actively investing, with the DTZ deal expected to take the fund as far as one-third deployed already, according to one LP source. The fund is also expected to raise a further $1 billion in co-investment capital.