Jan 27, 2015

Cromwell Announces Acquisition of Valad Europe and €150 million Convertible Bond Issue

London, 27 January, 2015: Cromwell Property Group (ASX code: CMW) (Cromwell) today announces the acquisition of Valad Europe, a pan European property funds manager with assets of approximately €5.3 billion under management, to be funded by an underwritten €150 million Convertible Bond issue1.


  • €145 million (A$208 million)2 acquisition of Valad Europe (Acquisition)
  • Pan European platform managing €5.3 billion (A$7.6 billion)2 with 24 mandates across 13 countries
  • Represents the acquisition of a scale, critical mass funds management platform
  • Increase in total Cromwell external assets under management to approximately $9.0 billion3 and funds management earnings contribution to approximately 14%4
  • €150 million (A$216 million)2 underwritten Convertible Bond issue (Convertible Bond Issue)
  • Acquisition and Convertible Bond Issue expected to be operating earnings neutral for FY15 and greater than 5% accretive for FY16

The Acquisition

Cromwell has entered into a conditional share purchase agreement to purchase Valad Europe from Blackstone Real Estate Partners VI (Blackstone) and Valad Europe senior management. The Acquisition is conditional on Cromwell and Valad Europe receiving regulatory approvals from the UK Financial Conduct Authority and the Guernsey Financial Services Commission. These approvals are expected to be received by 9 April 2015, with settlement immediately thereafter.

Valad Europe is a pan European property funds management business with assets under management (including investment capacity) of approximately €5.3 billion (A$7.6 billion)2 across 24 mandates and funds and 13 geographies.

Valad Europe was originally part of the Australian listed Valad Property Group until Valad Property Group was acquired by Blackstone in 2011. Following that, Blackstone and the Valad Europe management team separated the Valad Europe business from the rest of the group and rebranded it as Valad Europe.

Cromwell CEO, Paul Weightman said, “The acquisition of Valad Europe presents the opportunity to acquire a successful, value add property funds management platform with scale across a number of geographies and sectors. The business is a strong cultural fit with Cromwell, is complementary to our existing funds management operations, and furthers our strategy to increase the earnings contribution from funds management to approximately 20%.

We welcome Martyn McCarthy and the rest of the Valad Europe team and look forward to continuing to grow the Valad Europe business, and to taking advantage of future opportunities across the two platforms.”

Martyn McCarthy, Executive Chairman of Valad Europe said “We are very pleased to have in Cromwell a long term capital partner who is committed to funds management, and is supportive of our continued aspirations to deliver strong performance to, and alignment with, our investor and banking financial partners.”

Anthony Myers, Head of Real Estate Europe at Blackstone, said “Valad Europe has been a successful investment for us and the business continues to strengthen its presence in the European market. We wish the team well with Cromwell and are confident that they will continue to create further success.”

The total consideration for the Acquisition is €145 million (A$208 million)2. The funds management platform is being acquired on an attractive EBITDA multiple of approximately 6.4x5.

Convertible Bond Issue

The Convertible Bonds will be issued by Cromwell SPV Finance Pty Ltd (Issuer) and will pay a fixed coupon rate of no more than 2.375% per annum (underwritten maximum) for a term of five years. The Convertible Bonds will rank as unsubordinated, unconditional, and unsecured obligations of the Issuer, guaranteed by Cromwell, and are intended to be listed on the Singapore Exchange Securities Trading Limited.

Prior to maturity, the Convertible Bonds are convertible into Cromwell stapled securities at a price of at least $1.12 per stapled security (underwritten minimum) (subject to certain adjustments), which reflects a premium of 5% to the Cromwell stapled security closing price on 23 January 2015.

The Convertible Bonds have been offered outside the United States in compliance with Regulation S (Category 1) of the US Securities Act of 1933, as amended, and will not be registered under the US Securities Act.

Merrill Lynch (Australia) Futures Limited is acting as sole book runner and underwriter to the issue. Following the bookbuild, the final issue size, coupon and conversion price will be determined.

Indicative timetable

Key Event


Trading Halt

Tuesday, 27 January 2015

Announcement of Acquisition and Convertible Bond Issue

Tuesday, 27 January 2015

Convertible Bond offer

Tuesday, 27 January 2015

Trading recommences

Wednesday, 28 January 2015

Settlement of Convertible Bond

Wednesday, 4 February 2015

Completion of Acquisition

on or before Thursday, 9 April 2015

* All dates in this announcement are subject to change

Impact of the Acquisition and Convertible Bond Issue

The Acquisition and Convertible Bond Issue are expected to be operating earnings neutral for FY15 and greater than 5% accretive for FY16.

Cromwell’s external assets under management will increase to approximately $9.0 billion6 and funds management earnings contribution will increase to approximately 14%7.

Pro forma Gearing8 is expected to increase to 45.4% following the completion of the Acquisition and Convertible Bond Issue, which remains within Cromwell’s target gearing range of 35% to 55%.

Additional information

Further information in relation to the Acquisition and the effect that it and the Convertible Bond Issue will have on Cromwell's financial position and performance can be found in the presentation provided to the ASX by Cromwell today.