Dexus moves to buy Collimate
Dexus has entered a Share Sale and Purchase Agreement for Collimate Capital Limited – the new name for AMP Capital’s fund management platform, real estate and domestic infrastructure equity business.
The deal will see Dexus acquire the AMP Limited subsidiary for an initial $250m cash payment, plus a total earn out consideration of up to $300m, given conditions.
Dexus is additionally expected to buy stakes in various other funds, from AMP (including one which co-controls Sydney’s Quay Quarter Tower, pictured, top), for up to $450m.
The move comes a year since unitholders in the then-$5 billion AMP Capital Diversified Fund voted to merge with the $10b Dexus Wholesale Property Fund.
Last May Dexus also started the successful process to snare fund manager APN, increasing its retail exposure.
Collimate was spun off ahead of a planned demerger and relisting.
If the platform sale is approved, Dexus’ funds under management tally would more than double from c$25b.
Collimate Capital
The Collimate platform manages funds worth $27.9b – 65 per cent ($18.2b) of which is property, with infrastructure the balance.
“Dexus plans to hold consultation sessions with Collimate investors over the coming weeks to discuss the merits of the transaction and determine the Collimate Assets Under Management to be transferred to the Dexus platform as part of the transaction,” the buyer said.
“Collimate holds co-investment stakes in the platform funds totalling c$180m, which Dexus will offer to acquire as part of the transaction, subject to pre-emptive rights processes and relevant consents,” it added.
“In addition, Collimate has provided a commitment to acquire a further circa $270m of units in AMP Capital Wholesale Office Fund, which Dexus will also offer to acquire as part of the Transaction, subject to discussions with investors, pre-emptive rights processes and relevant consents,” according to the group.
“Total cash consideration payable by Dexus for these co-investments is dependent on their current unit value at the time and is anticipated to be c$450m.
“Dexus intends to retain Collimate’s key people as part of the transaction, to continue to support the real estate business and entry into the infrastructure segment alongside a strongly credentialed and established team”.
This includes existing team leaders Michael Bessell and Michael Cummings (story continues below).
Deal accelerates diversification strategy: Dexus
Dexus said the transaction is in line with its strategy “of expanding and diversifying its funds management business and will accelerate growth through the combination of two complementary platforms”.
The deal, it added, expands the group’s fund manager platform with a bigger investor base.
It also increases the company’s capabilities and provides scalable opportunities for growth.
“I am excited to announce this opportunity which positions Dexus as a leading real estate manager, with new capabilities and an expanded product offering, underpinned by our best practice governance and risk management framework,” Dexus chief executive officer, Darren Steinberg, said.
“It delivers on our strategic objectives of being a real estate partner of choice and delivering resilient income streams, while enhancing our ability to leverage the key megatrends benefiting real assets,” he added.
“This alignment forges the pathway to creating long-term value for our…security holders and the investors across our funds management platform, both existing and new,” according to the executive.
“Infrastructure is a logical next step for Dexus’s funds management business, underpinned by compelling sector fundamentals and a positive growth outlook.
“The Collimate team has a strong track record and well established relationships with investors.
“This will now be enhanced by the core skills across the Dexus platform.
“Our more than 35-year track record in funds management, alongside our experience in integrating funds management businesses and assets, supported by transition services from Collimate, will enable us to provide continuity of service to our investors and funds management partners during the transition”.
Citigroup Global Markets Australia, JP Morgan Securities Australia Limited and MA Moelis Australia Advisory are Dexus’ financial consultants. Allen & Overy is its legal advisers.
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