Peakside agrees first Europe fund takeover

Peakside Capital, the European private equity real estate firm, has agreed its first strategic takeover of a property fund since spinning out from Bank of America Merrill Lynch in September 2010.

The company, which has around €1.4 billion of assets under management, has agreed with Allied Irish Banks to acquire the Irish lender’s Polish property fund subsidiary, AIB PPM, and its interests in two property funds, Polonia Property Fund LP and Polonia Property Fund II. The deal will boost Peakside’s gross assets under management by 42 percent to €2 billion.

Peakside said that the investment was being made on behalf of Peakside Real Estate Fund 1 (PREF), a pan European opportunistic fund with €261 million of commitments raised when Bank of America Merrill Lynch owned the business prior to Peakside spinning out.

As part of the deal with Allied Irish Banks, separate agreements have been signed by Peakside and fellow Swiss-based firm Partners Group to acquire Allied's 9.87 percent interest in Polonia Property Fund LP and 7.5 percent interest in Polonia Property Fund II. Peakside and Partners have structured those investments on a 50:50 basis, it said.

Peakside also said this was the firm’s first investment in Poland. It will substantially increase its headcount and add an office in Warsaw to its network, alongside its existing offices in Switzerland, the UK, and Luxembourg.

Completion of the transaction is conditional upon obtaining certain regulatory approvals and other consents. In a statement, the company added: “Peakside has been evaluating the opportunity to expand its activities in Poland for some time, owing to the ongoing attractive fundamentals of the market and its growing interest to international investors. Poland is a core market for Peakside, alongside Germany and the other leading markets of the CEE.

Allied Irish Banks, or AIB for short, effectively became nationalised following Ireland’s economic downfall precipitated by the global financial crisis, and it, like other Irish banks, has been shedding businesses including real estate investment management as a result.

In April last year, it sold its main interests in Poland, including its entire shareholding of bank, BZWBK, to Spain’s Banco Santander for €3.1 billion.

During its expansionary phase in the 2000s, the bank’s capital markets group launched the two Polish property funds as part of its push into the country. The first of those vehicles, Polonia Property Fund LP, in 2003 and was owned by AIB’s Warsaw subsidiary AIB PPM Sp z.o.o. According to an announcement at the time of the fundraise, it contained €100m equity, some 60 percent of which was provided by Irish investors and the balance by significant European LPs.  AIB Capital Markets committed €10 million as the sponsor. The European Bank for Reconstruction and Development (EBRD) and IMMOEAST, a subsidiary of what was then described as Austria’s largest publicly traded real estate stock company IMMOFINANZE, were also investors in the fund. There was also ‘significant support’ from the bank’s customers through AIB Private Banking and AIB Corporate Banking. Polonia Property Fund II was the follow up to its 2003 vehicle.

AIB said in its statement on the deal with Peakside was that the sales proceeds for the entire transaction would not be disclosed, yet the “positive impact” on the bank’s capital position as a result of the transaction would not be material.