The Blackstone Group, in partnership with Pátria Investimentos, has agreed to acquire a 70 percent stake in Alphaville Urbanismo, a Brazilian urban community developer, from São Paulo-based homebuilder Gafisa for R$1.4 billion (€496 million; $656 million). The deal, which is scheduled to close during the second half of the year, marks the firm’s first joint real estate investment with Pátria, in which it bought a 40 percent stake in 2010.
Gafisa, which has been the majority owner of Alphaville since 2006, initiated an analysis for strategic options for the business in September 2012, including a possible IPO, the sale of a stake in the business or maintaining its existing status. By April, the homebuilder reportedly had received offers from Blackstone and Pátria, along with private equity real estate firms Equity International, Hemisfério Sul Investimentos and VBI Real Estate, to buy Alphaville.
“After careful consideration, the Gafisa board of directors together with the senior management team determined that the sale of a majority stake to the Blackstone and Pátria Investimentos would generate the highest potential value for Gafisa shareholders,” Gafisa said in a statement.
Separately, Gafisa also agreed to complete the purchase of the outstanding 20 percent stake in Alphaville from the business’ founding partners for R$367 million, which will allow Gafisa to retain a 30 percent interest in the business. Blackstone and Patria will maintain Alphaville’s existing management team and allow Gafisa to hold two out of six seats on Alphaville’s board. Alphaville will remain an affiliate of Gafisa.
Like many of Brazil’s public homebuilders, Gafisa aggressively expanded after going public in the mid-2000s and subsequently suffered from cost overruns, plummeting stock prices and mounting debt. Cash proceeds from the Alphaville sale will help the company to reduce leverage and remove financial constraints, Gafisa said in the statement.
With the acquisition of the Alphaville stake, Blackstone is making deeper inroads into Latin America’s largest real estate market. The New York-based private equity and real estate firm also has invested $500 million in a retail development joint venture with Pátria, with plans to build between 10 and 20 shopping centers in Brazil’s secondary cities over the next several years. Alphaville, which was valued by the transaction at R$2.01 billion, has a sizable land bank with potential sales of R$13 billion.