Becton enters agreement to sell its Funds Management business
Becton Property Group Limited (“Becton” or “the Group” ASX:BEC) has entered into a share sale agreement to sell its Funds Management business, Becton Investment Management Limited (“BIML”), to 360 Capital Group (“360 Capital”), a specialist property funds manager.
Key elements of the sale include:
•The transfer of the entire Becton Funds Management business, including a number of employees, to ensure a smooth transition for all stakeholders including investors, planners and advisors, financiers, external service providers and employees.
•Payment of an upfront initial cash payment plus an agreed revenue share agreement over
the next three years.
•A call option to purchase Becton’s 58.9% stake in the Becton Diversified Property Fund
(“BDPF”). BDPF has major co-investment stakes in most of the funds managed by BIML.
•The sale is subject to a number of conditions precedent, including the approval of fund
The sale of BIML and Becton’s co-investment stakes in the funds will see Becton exit its current
property investments and Funds Management business.
This transaction does not affect the recently announced recapitalisation and refinancing plan for
Key benefits for Becton (BEC) security holders include:
•The realisation of on-balance sheet assets.
•A $650.6 million reduction in the amount of debt managed by the Group.
•A simplification of the business and the ability of management to focus on creating security holder value through core activities in the Development & Construction and Retirement Living businesses.
Key benefits for fund investors include:
•360 Capital has a highly experienced and specialised management team.
•Enhanced prospects of attracting new capital to stabilise the funds through 360 Capital
being a debt-free specialist property funds manager.
•The transfer of a number of Becton Funds Management employees to ensure a smooth
transition without the loss of fund and asset knowledge that might otherwise occur on acquisition.
•A new manager who is independent of Becton and the legacy issues arising from
perceptions about the viability of the Group.
•An ongoing alignment of interest between manager and investors, subject to the exercise
of the call option, through 360 Capital’s co-investment in the funds.
The sale of BIML is the culmination of a comprehensive process involving discussions with more
than 25 parties over the past 18 months. The sale involves the transfer of the entire Becton Funds
Management platform together with a number of employees, to ensure a smooth transition to the
Becton CEO Mr. Matthew Chun said, “The sale of this business is a positive development for both
the investors in the Becton managed funds and the Becton Group. It is in line with our stated
strategy of focusing on a smaller number of core projects in which our competitive strengths are
“The Funds Management business is passing to a respected and highly skilled specialist property
funds manager who will continue to act in the best interests of all investors, is free of debt, focuses
exclusively on these types of investments and is well placed to build on the considerable progress
we have made over the past two years to stabilise the platform.”
“Becton will ensure a smooth transition for all stakeholders. I would like to take this opportunity to
thank the management and staff of the Funds Management business for their dedication, hard
work, loyalty and commitment, particularly over the last two years.”
“I would also like to thank our investors for their loyal support during their association with Becton.
We are confident that this step is a positive one – one which will enable the funds to move toward
increasing distributions and providing investors with opportunities for liquidity in the near future.”
Since meetings of sector fund investors in December 2009, Becton has explored various options
for the recapitalisation of the managed funds, including the potential merger of funds, listing and
recapitalisations. However, none of the options would have achieved the dual objectives of
resolving the capital management challenges facing the funds and the protection of investor value.
Throughout this time, both debt and equity markets have remained constrained and the
competition for available capital has been strong, with lenders reluctant to lend to the property
sector and investors adopting a conservative approach to investment in unlisted property. As a
result, Becton has continued to refinance and selectively sell assets to repay debt.
In the context of all of these considerations Becton has determined that the functional separation
of the Funds Management business from the Group is the best course of action for all key
stakeholders. The sale of the business to 360 Capital will achieve such a separation.
About 360 Capital
360 Capital Group’ primary business is specialising in property investment and property funds
management activities as well as strategic property advisory to select clients. Tony Pitt is
Managing Director and majority shareholder of 360 Capital. He was previously an Executive
Director of James Fielding Funds Management Limited, JF Meridian Management Limited and
Hotel Capital Partners Limited, Bankminster Properties Limited and Travelodge Hotel Group. He
also held positions at Paladin Australia Limited, Jones Lang LaSalle and Richard Ellis. Tony is
currently a director of 360 Capital Group, Pentagon Property Group and the ASX listed Trafalgar
Corporate Group (ASX:TGP) and Olea Australis Limited (ASX:OLE).