German listed investment manager Patrizia is planning further acquisitions and has around €700m in liquidity for this, CFO Karim Bohn said in a interview. It has also settled a dispute with Union Investment over a request to pay a €300m special dividend.
Speaking just one week after the signing of an accord to acquire a Danish fund of funds, Bohn told the Börsen-Zeitung newspaper that Patrizia, based in Augsburg, Bavaria, aims to go further and will focus Europe-wide in its search.“We aim to grow through complementary acquisitions,” he said. This year is proving to be a good one for acquiring equity positions.
Patrizia announced on 12 October that it is acquiring Copenhagen-based Sparinvest Property Investors, a global real estate fund of funds investment manager in the small- and mid-cap segment. SPI runs €1bn in assets, currently through four real estate funds with equity commitments totalling €1.5bn. No purchase price was given.
Bohn said that the acquisition focus is not on large acquisitions but on diverse smaller deals, and he sees no price bubble for potential targets. “The current prices of the potential asset and investment management candidates are quite within our expectations,” he told BZ. The group intends to grow organically in the next few years as well as through external acquisition, and he predicts an organic increase in assets of around 10% annually which, including acquisitions, could more than double its total portfolio to some €50bn by 2021 from currently around €20bn.
Hamburg-based Union Investment, the fund manager for the Volks- and Raiffeisen banking system, in the summer made an unpublicised request to Patrizia founder and CEO Wolfgang Egger that Patrizia distribute a one-time special dividend of €300m. The firm does not pay a dividend, but Bohn said he does not categorically exclude this for the future. “Distributions are always an option that are being discussed and considered in a responsible way,” he said.
As for the UI request, he added only: “The issue is now off the table. We have an unchanged good relationship with Union Investment.”
BIE COMMENT: Precisely the challenge for investors in Patrizia is that rising assets under management, now €20bn, are producing a comparatively small profit – just €35m operating at 1H17 – and no dividend. It is the perception and transparency challenge of a publicly-listed company that is also a fund manager earning fees internally that don’t seem to find their way substantially into the bottom line. This difficulty has been recognised in many markets, most recently Italy where Coima Res, for example, at its foundation and IPO, made a very distinct separation of the new listed portfolio from its existing fund management operations.