Goldman Sachs plans public exit of LEG in Germany

Wall Street bank steps up its harvesting programme of European investments via the IPO of German housing platform, LEG Immobilien.

Goldman Sachs is stepping up its exit programme of European investments via a public listing of one of Germany’s largest German residential property companies, Dusseldorf-based LEG Immobilien.

The US bank, which owns 90 percent of LEG, has slated the Initial Public Offering (IPO) of LEG and its 91,000 units for the first half of this year. The shares will be placed upon Frankfurt’s senior stock exchange and will be publicly offered to private investors in Germany and to institutional investors nationally and internationally via private placement. Hedge fund Perry Capital owns the other 10 percent of the company.

Goldman Sachs acquired a majority interest in LEG from the German state of Nordrhein-Westfalen (North Rhine-Westphalia) in 2008. According to PERE at the time of the original investment, Goldman agreed to pay €787 million ($1.2 billion) in equity and assume €2.6 billion of debt in the company LEG at an enterprise value of €3.4 billion.

The IPO is just part of a ‘havesting’ programme of assets in Europe by Goldman Sachs as it looks to return capital to investors. Just before Christmas, it was revealed how Highstreet Holdings, in which the Wall Street bank has a 51 percent stake, had agreed to sell a 17-strong portfolio of German assets for €1.1 billion to Austria’s Signa Holding. It has also recently sold a portfolio of hotels in Paris for around €450 million. The investments are spread across different REPIA funds including Whitehall funds with 2005, 2007 and 2008 vintages while Goldman Sachs also has a separate fund for LEG.

LEG owns housing in the economically strong region of North Rhine-Westphalia and made pre-tax profits of €210.6 million last year. In a statement, the company said the “successful transition from a state-owned public housing supplier and urban and project developer to a private housing company serves as the basis for profitable future growth”. Thomas Hegel, chief executive officer, added: “The LEG management and employees have done a great job during the past few years and successfully paved the way for LEG’s transition from a state-owned public housing supplier and urban and project developer to a private housing company. In doing so, we have shown that we have the ability and capacity to satisfy both tenants and investors. It is on this basis, that we aim to grow profitably in the coming years.”