Corporate News
- Transaction will establish Aareon as an independent company majority owned by TPG and CDPQ as minority co-investor
- Aareal Bank and Aareon to continue to cooperatively support their clients following the transaction
- Gain on sale to be booked in Aareal Bank Group with closing in H2 2024, most transaction-related costs with signing in Q2Wiesbaden,
24 June 2024 – Aareal Bank and Advent International (“Advent”) today
announced that they have entered into an agreement with TPG and CDPQ for
them to acquire Aareon, a European provider of Software-as-a-Service
(SaaS) solutions for the property industry. The financial terms of the
sale are based on an enterprise value for Aareon of approximately € 3.9
billion, valuing Aareal Bank’s equity stake in Aareon at approximately €
2.1 billion. Closing is expected to take place in the second half of
2024, subject to customary closing conditions and approvals.
The transaction and partnership with TPG will
provide Aareon access to additional, dedicated resources and expertise
to drive innovation and further growth. TPG will invest in Aareon
through TPG Capital, the firm’s U.S. and European private equity
platform, in consortium with CDPQ, a global investment group, who will
co-invest alongside TPG for a minority interest in Aareon. Advent will
continue its involvement in Aareon with the investment of new equity for
a minority interest in the standalone company.
With its Property Management System, Aareon
promotes efficient and sustainable property management and maintenance.
The company’s portfolio enables seamless, automated end-to-end processes
connecting property managers and owners across the residential and
commercial real estate sectors. The company is headquartered in Mainz,
Germany.
Jochen Klösges, Chief Executive Officer of
Aareal Bank and Chairman of the Supervisory Board of Aareon, said: “We
are pleased to have found new owners for Aareon who, thanks to their
financial strength and pronounced industry experience, are well
positioned to propel Aareon into its next major step of evolution. Over
the past few years, we successfully developed Aareon into a ‘Rule of 40’
company, that has demonstrated impressive organic and inorganic growth.
We look forward to maintaining our successful collaboration through our
joint venture, First Financial Software, which not only fortifies our
long-term partnership with Aareon but also opens up further growth
prospects for all parties involved.”
Flavio Porciani, Partner at TPG, said: “For many
years, we have admired Aareon’s position as a leader in the European
property management industry and are thrilled to partner with the Aareon
team and our fellow investors to build on the successes of the business
as a standalone company. The need for comprehensive property management
solutions is growing amid a trend towards digitalisation of real estate
workflows and an increasingly complex regulatory environment. Aareon’s
platform is built to support this evolution, providing owners and
managers an integrated, modern system that improves connectivity and
streamlines business operations.”
Jeff Paduch, Managing Partner of Advent
International and Supervisory Board Member of Aareon, commented: “We are
proud to have supported the leadership team and employees of Aareon in
their successful transformation, which is culminating in one of the
largest software buyouts in Europe in 2024. The company is well
positioned to continue to lead innovation for its customers in the
European housing ecosystem and is on a path of sustainable growth with
exciting opportunities ahead for all stakeholders.”
Harry Thomsen, Chief Executive Officer of
Aareon, said: “This transaction marks a milestone in the development of
Aareon. Thanks to the strong support of our owners Aareal Bank and
Advent International, the company has made excellent progress in recent
years. Now, we have reached a point where we can take the next step in
our development. We are in an ideal position to capture further growth
opportunities and welcome TPG and CDPQ as experienced and strong new
partners.”
Following the transaction, Aareal Bank and
Aareon will continue to seamlessly cooperate to support their clients
through their joint venture First Financial Software. First Financial
Software provides clients with specialist expertise around payment
software solutions for the property sector and related industries.
Significant gain on sale after transaction related costs expected in 2024
The sale of Aareon will lead to a significant
gain on sale net of transaction-related costs in Aareal Bank Group of
approximately € 2 billion. The gain will be booked upon closing, which
is expected in the second half of 2024. Meanwhile, most
transaction-related costs of around € 150 million will already have to
be recognised in the second quarter, coinciding with the signing of the
transaction. The gain on sale net of transaction-related costs had not
been considered in Aareal Bank Group’s previous guidance for the 2024
financial year, which will be adjusted upwards. In addition, Aareon will
be reported as a discontinued operation according to IFRS 5 starting in
the second quarter until closing.
Aareal Bank’s banking business excluding Aareon
is well on track to achieve its operating target of € 250 million to €
300 million for the 2024 financial year. The Bank alone generated around
€ 92 million of consolidated operating profit in Q1 2024 and accounted
for an operating profit of € 221 million in 2023. The Group’s Common
Equity Tier 1 ratio (Basel IV phase-in ratio) stood at 19.7 per cent at
the end of the first quarter of 2024.
Arma Partners acted as lead financial advisor
and Goldman Sachs acted as financial advisor to Advent International and
Aareal. CMS served as legal counsel for Aareal while Weil, Gotshal
& Manges LLP provided legal advice to Advent International. Morgan
Stanley & Co. International Plc acted as financial advisor to TPG
and CDPQ and Kirkland & Ellis LLP served as legal counsel.