UGL, the Australian-listed engineering and facilities management group, has confirmed it has reached an agreement to sell its property services business DTZ to a consortium of private equity bidders.
In an announcement made today to the Sydney stock exchange, UGL said it had entered into a binding agreement to sell DTZ to Austin, Texas-based firm TPG Capital, Hong Kong-based PAG Asia Capital and Canadian pension fund, Ontario Teachers’ Pension Plan for $1.215 billion.
The purchase was made all-cash, according to the announcement and although still dependent on regulatory approvals, is subject to no other material adverse change or other business related conditions, UGL said. Under the terms of the deal, UGL has also committed to a transition services agreement to ensure a smooth handover that runs until next August.
While TPG and PAG both run sizeable real estate businesses, this acquisition was made via their private equity platforms. TPG, for its part, has been investing in Asia from its recently closed, sixth Asia fund which closed on $3.3 billion.
The sale comes after four months of evaluation by UGL into third-party interest in DTZ that ran after, but also in parallel with, it separately considering a public listing of the company. “Following completion of this process, the board has determined to enter into a binding sale agreement with TPG and PAG Consortium.” The sale brings UGL’s three year ownership of DTZ to a close.
UGL chairman Trevor Rowe said in fact its evaluation of how to balance DTZ’s property business with its longer-held engineering business had taken 18 months. “UGL is comprised of two distinct and sizeable businesses which operate in different markets, with different geographical focuses and strategic requirements.”
“The board continues to believe a structural separation of DTZ and Engineering is in the vest interests of shareholders, and will be beneficial for both our clients and our people,” he added.
UGL will use the proceeds from the sale for further growth opportunities, both organic and strategic as it re-focuses its efforts on its core engineering services operations.
According to one source familiar with the situation told PERE last week how the investment by TPG, PAG and Ontario should constitute something of a capital injection with a view to growing the global advisor into a greater challenger to its peers like CBRE and Jones Lang LaSalle. “A fairly sizeable injection of equity, that’s what we’d have over our competitors,” the source said.