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Nomura lifts off in Europe

Nomura has launched a renewed effort to invest in European real estate with a deal to buy around €800 million of DIY stores in Germany.

Nomura International, the European subsidiary of the Japanese bank, has teamed up with Germany's second biggest home improvement chain, Praktiker, to win the auction for retailer Max Bahr, a group that operates 76 stores predominantly in the north of the country. The auction also attracted European buyout firms Permira and Patron Capital.

Praktiker is buying the operating business of its smaller rival, but, assuming competition clearance is given, Nomura will then acquire all the properties, which total 513,249 square meters, and lease them back to the retailer. As part of the agreement, Praktiker will take a 24 percent stake in the vehicle that holds the property, called Moor Park Holdings Luxembourg Sarl, giving it a degree of control over the assets.

Nomura refused to comment on the deal before completion. However, it marks an important milestone for the bank. In April, Nomura created a new strategic alternative investment fund called the European Funds Group (EFG) into which it injected €325 million ($419 million) of equity.

The first fund, focusing on mezzanine finance, is named through the European Mezzanine Fund 1 while the second is called the Real Estate Return Enhancement Fund 1.

Gary Wilder, former head of Nomura's asset finance group, is head of EFG along with Santiago Corral, former head of the firm's mezzanine business. Seed capital for the real estate fund is coming from UK property company London & Regional, which teamed up with Nomura last year to try to buy supermarket group Somerfield.

Wilder's previous deals at Nomura include buying London's Earls Court and Olympia exhibition and conference centers for €370 million in 2004 as part of a consortium.

Nomura will be hoping to recapture the kind of form it showed when top dealmaker Guy Hands was still at the Japanese bank. Hands led the principal finance group to some major property deals in the housing and pub sectors. In 2000, for example, Nomura International bought 114,000 German railway worker flats as part of a consortium in which Nomura owned 55 percent.

Hands' new private equity firm Terra Firma has since gone on to become a potent force in the European property and private equity markets.