The Caisse de depot et placement du Quebec (CDP) in Montreal on July 21, 2010.Christinne Muschi/The Globe and Mail
Quebec's pension fund manager has joined forces with two other global investors to buy European real estate company Foncia group for up to €1.833-billion ($2.6-billion), building a toehold for growth in the highly fragmented European property management sector.
Caisse de dépôt et placement du Québec will be a minority partner in the buying consortium, but a Caisse official said the fund will not reveal its ownership level in Foncia or how much it paid for its stake.
The consortium is led by Partners Group, a private-equity firm based in Switzerland, which will be the majority owner of Foncia and control a majority of directors on the board. The consortium also includes CIC Capital, a subsidiary of China Investment Corp., a Chinese state-owned investment firm.
Foncia, based in Paris, specializes in residential property management in Europe, offering services such as rental and condominium management, lease management, as well as property sales services including credit and insurance brokerage. The company has 500 branches with 8,000 employees and manages more than 1.8 million properties, earning revenue of about €700-million in 2015.
The buying group said it plans is to continue Foncia's recent strategy of consolidating the fragmented French property management market and will also accelerate the company's expansion in other countries.
"Foncia's management has had an impressive track record over the past few years and we will support them moving forward alongside leading partners," Caisse de depot chief investment officer Roland Lescure said in a statement.
The property company was owned by two private investors: French investment firm Eurazeo and British investment fund Bridgepoint. They bought 81 per cent of Foncia in 2011 and the remainder in 2014, and launched a restructuring project to modernize and expand the company. Foncia made more than 60 acquisitions of small companies in recent years to strengthen its business in France and build leading positions in Switzerland and Belgium.
Since 2011, Foncia's average revenue has grown by 4.4 per cent annually and the company's operating earnings have climbed by 53 per cent to €132-million from €85-million in 2011, Eurazeo and Bridgepoint said on Tuesday.
While the buying group released no financial details about its purchase, Eurazeo and Bridgepoint said they sold the company for an enterprise value of €1.833-billion.
The partners did not reveal how much debt was included in the enterprise value, but said their net gain on the sale amounts to €1.134-billion after tax, transaction costs and debt repayment. The two funds said they earned a return of 2.4 times on their original investment.
Kim Nguyen, managing director of European equity for Partners Group, Foncia's new majority owner, said the company is a "unique asset" in the property management sector.
"We have tracked its progress closely and are attracted by the resilient and cash-generative nature of the business," he said. "We see a number of clearly defined growth avenues for the company both in France and in the wider European market."
He said Foncia wants to become a "fully integrated one-stop-shop" service provider.
The company has invested heavily in technology to upgrade its client services, and Eurazeo managing director Mark Frappier said in a statement that Foncia has undergone a "profound transformation" in five years.
"We are passing on a solid and modernized company with an excellent growth outlook to Partners Group," he said.
The sale requires antitrust clearance, but Eurazeo and Bridgepoint said the deal should be completed no later than September.
Janet McFarland