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Bridge’s Morse: IPO cash paves way for ‘consolidation opportunities’

After its $300m float, the Salt Lake City firm will explore M&A opportunities and look to expand its reach beyond the US.

In a market chock full of mergers and acquisitions, Bridge Investment Group would rather be a buyer than a seller.

Interested suitors have made bids to acquire minority stakes in the Salt Lake City-based manager this year, while others have offered to purchase it outright, Bridge executive chairman Robert Morse tells PERE. Instead, the firm decided to bet on itself with a public offering.

Morse: Bridge’s best days are ahead

“We felt the IPO gave us the best opportunity to preserve and enhance what we had built, to lay the foundation for future growth and to really crystalize the belief that our best years are ahead of us, not behind us,” Morse said. “If you sell the company today, you’re capping your upside, in one way shape or form, and we didn’t want to do that.”

In July, Bridge executed a successful float on the New York Stock Exchange, raising $300 million. Trading under the ticker BRDG, the firm now has a market value of $1.8 billion.

Morse said the firm will use the capital injection to finance growth initiatives. “We operate in a fragmented industry and there are consolidation opportunities,” he said. “Having a little dry powder to pursue some of those is really important.”

Through the first half of 2021, the real estate industry was on a record-setting pace for M&A activity, according to a report from New York-based advisory firm Hodes Weill & Associates. And that pace is projected to carry through the rest of the year.

High on Bridge’s list of potential acquisition targets will be smaller managers that operate outside the US as well as those with core-plus platforms to complement its expertise in the value-add space, Morse said. The firm will continue to focus on residential, logistics, offices, net lease strategies and debt.

“We fought through 10 years of being, effectively, a start-up to being a mid-size manager,” he said. “We feel we can take some of that capacity and some of those learnings and be part of the process of consolidation where we can enable smaller managers to accomplish their goals under our umbrella.”

‘An additional layer of comfort’

Founded in 2009, Bridge’s list of investors is about 6,600 strong, including pension funds, insurance companies, family offices and high-net-worth individuals. With recently launched retail distribution channels targeting Europe, the Middle East and Africa, as well as Korea, the firm is adding more investors “on a daily basis,” Morse said.

Working with such a large investor base has prepared the firm for the added scrutiny of being a listed enterprise. “I would hope and expect that our service to investors won’t change,” Morse said. “If anything, it will get better. Our job is to perform and communicate effectively with our investors.”

For the extra work involved, Morse said he expects Bridge to appeal to a broader swath of institutional investors, especially among international groups. “[Being publicly traded is] not going to change how we do things because we’ve worked in a very transparent way to date,” he said. “But it also provides an additional layer of comfort for our investors, as well.”

Bridge has $28.7 billion of assets under management. It ranked 19th on PERE’s 2021 list of the top fundraisers in the sector, with $7.7 billion raised over the past five years. As of Thursday afternoon, its stock is up 13 percent from its IPO.