ASX-listed property fund manager Centuria Capital has moved to secure New Zealand’s largest listed real estate funds management platform for $174 million.
Centuria said it initiated the cross-Tasman takeover of Augusta Capital, a fund manager with a strong foothold in Auckland's commercial property market, after considering the New Zealand platform for “some time”.
The play will see Centuria lift its assets under management by $1.9 billion to $9.2 billion, an increase of 26 per cent, while gaining access to Augusta's funds management revenues which have “attractive fees across the various funds”.
According to the Centuria's overview of the transaction, it would “become one of the leading funds management platforms in the Australasian region”.
The takeover will be funded with existing cash reserves, a new debt facility, and an $80 million institutional placement being managed by financial advisors Moelis and UBS at an issue price of $2.34 per security.
Centuria noted that the placement was increased from the original target of $60 million due to demand. The issue price represents a 2.5 per cent discount to the five-day value weighted average price of $2.40 on 28 January.
New securities issued under Centuria's placement will rank equally with existing securities and will be entitled to the full distribution for the six-month period ending in June of this year.
Augusta shareholders, holding 36.2 per cent of company, will be offered $NZ2 per share via a “mix and match” facility while founders Mark Francis and Bryce Barnett, who hold a 23.3 per cent stake will continue to head the business after entering into pre-bid lock up agreement.
The Sydney-based fund manager said the transaction would deliver immediate scale for the Australian listed company across the New Zealand market, with a concentration towards Auckland.
“The Centuria board has been considering a New Zealand platform acquisition for some time,” Centuria’s joint chief executives John McBain and Jason Huljich said.
“The acquisition of Augusta is consistent with our existing strategy and the two groups are extremely compatible.
“We are attracted to Augusta’s leading position in New Zealand, it's strong distribution platform and its fund origination capability.”
The acquisition will complement Centuria’s existing portfolio in the Office and Industrial markets with approximately 70 per cent of Augusta’s assets under management invested in these two sectors.
The Augusta pick up will also expose Centuria's funds management revenues through an exposure to the large format retail market and New Zealand’s growing tourism sector.
“We are pleased with Centuria’s performance in 1H20 and with further assets currently under due diligence, we are confident of the prospects for continued organic growth in 2020,” Huljich said.
Once the deal is finalised, expected to complete during the 2021 financial year, New Zealand investors will lose the ability to buy purchase shares in Augusta as it is retracted from the NZX.