The senior management of Cordea Savills has agreed to sell its 40 percent stake in the business to Savills enabling the global property services firm to take full ownership.
The investment, announced on the London stock exchange this morning, saw Savills agree to pay £15.4 million (€17 million; $23.2 million) for a 40 percent stake in the platform previously controlled by 16 Cordea Savills executives including chairman John Partridge and chief executive officer Justin O’Connor.
The deal, which is subject to Savills shareholder approval, is structured so that Savills pays £4.6 million when the transaction closes followed by further payments of £4.5 million for the next two years. A further £6.3 million could be paid after two years subject to Cordea Savills’ performance in that period. The payments would be made from a combination of Savills’ existing resources and debt. In its announcement, Savills said the key employees would be incentivised to stay with the business.
Savills said it believed the investment “ensures the stability of the platform for future expansion whilst retaining its operational independence”. The firm added that it expected its investment in Cordea Savills to be “immediately earnings enhancing”.
Jeremy Helsby, Savills group chief executive said the investment was the result of a strategy agreed when Cordea Savills was formed in 2004 to review its ownership options after five years.
He added: “This transaction demonstrates our long term commitment to the fund management business and is a natural part of the evolution of Cordea Savills. The ability to service clients' indirect investment requirements is strategically important for Savills, and provides further balance to our transactional, consultancy and property management activities.”
Since its inception, Cordea Savills has launched a number or real estate investment funds, predominantly in Europe, following a number of strategies. At 31 December 2009, the firm had approximately £2.5 billion of assets under management. It has 89 staff and operates from offices in London, Milan, Munich, Stockholm, Luxembourg and Singapore.