BlackRock, the world’s largest asset manager, has emerged as the frontrunner to buy Asia and Europe-focused private equity real estate firm MGPA.
According to a report by UK commercial property magazine Property Week BlackRock is currently ahead of a number of other interested parties.
PERE revealed last month that MGPA was in play. Since then other prospective suitors have been mooted including Cornerstone Real Estate Advisors, the real estate investment management business of US insurer MassMutual, US private equity firms Kohlberg Kravis Roberts, TPG Capital and Guggenheim Partners as well as Australian asset managers Charter Hall and AMP Capital.
A sale price is still subject to much speculation with estimates of between $140 million and $200 million suggested, although the latter is understood to be too high. Boutique investment bank Berkshire Capital and law firm Clifford Chance are understood to be advising MGPA on the sale.
An MGPA tie-up with BlackRock could make strategic sense. BlackRock, the world’s largest asset manager with $3.79 trillion of assets under management, already has a presence in real estate investment management. But much of its approximately $13 billion of equity and debt assets under management are core in nature. Supplementing these with the 240-staff MGPA which is replete with strong development capabilities, particularly in Asia where it is developing two of Singapore’s largest office towers, Asia Square at Marina Bay, could be highly additive to its institutional investor offer.
Currently, institutional investors engaged in private equity real estate investing are typically favoring the operator model as offering more of a premium service than the traditional private equity allocator model given its proximity to the actual real estate.
MGPA, which comes with $11 billion of assets under management in Asia and Europe, is 56 percent owned by Macquarie Group, the Australian bank. The remainder is owned by its management, led by Singapore-based executive chairman James Quille and chief executive officer Simon Treacy. Quille, Treacy and other senior executives at MGPA formed the firm in 2004 after spinning out from Australian real estate company Lend Lease.
Should a deal with BlackRock crystallize, and PERE sources suggested that could happen this month, It would unite Quille and Treacy with Jack Chandler, BlackRock’s global head of real estate who joined in 2011 from LaSalle Investment Management. Chandler will be familiar with MGPA’s activities as he spent a decade in Asia building up LaSalle’s business in the region, principally via a series of opportunistic strategies. Indeed, in 2007, MGPA and LaSalle raised the two largest opportunistic real estate funds for pan-Asia investments to date, $3.9 billion and $3 billion respectively.
All parties declined to comment.