Principal Global Investors, the asset management arm of Principal Financial Group, is expanding in Europe with its acquisition of Internos Global Investors, a pan-European real estate investment management firm.
PERE understands that Principal searched for three years to acquire a pan-European real estate platform and considered a few other comapnies in the region before agreeing to buy Internos. Principal would gain more than 100 employees across the eight cities of Frankfurt, Paris, Madrid, Amsterdam, Luxembourg, Lisbon and Milan. The firm already has offices in Munich and London, according to PERE data.
Internos, meanwhile, had been evaluating ways to grow its business for the last couple of years, according to one source familiar with the deal. The firm is expected to be rebranded as Principal Real Estate Investors Europe once the deal receives regulatory approval. However, Internos’ investment teams will remain unchanged and it will continue to be led by the same senior management team. Terms of the transaction, which is expected to close during the first quarter of 2018, were not disclosed.
The deal marks one of the first transatlantic real estate mergers and acquisitions since 2014, when Cornerstone Real Estate Advisers (now Barings Real Estate Advisers), the real estate subsidiary of the Massachusetts Mutual Life Insurance Company, acquired Pamera Asset Management, a German real estate asset management firm. PERE understands that more deals are in process.
“As Principal grows its investment offerings and operations in Europe, we will continue to strategically invest in capabilities to deliver a greater range of solutions to our clients,” said Pat Halter, chief operating officer of PGI, in a statement. “In addition to gaining a pan-European real estate platform, Internos has local expertise and infrastructure in key European cities to grow our client base on the continent.”
“As part of Principal, we will be in an even stronger position to offer attractive opportunities to our clients and investor partners, combining the resources of a leading global investment firm with the small-business agility and deep European market knowledge of Internos,” said Internos chief executive Andrew Thornton.
Principal Real Estate Investors had $74.9 billion in assets under management as of September 30, while Internos managed $3.25 billion in assets. Principal is currently raising its second fund, Principal Real Estate Debt Fund II, according to PERE data. In June, Internos raised €133 million in the first close on its Hotel Fund II, and held a €135 million initial close on its European core vehicle, Internos Core European Balanced Fund, in May, PERE previously reported.
Berkshire Capital advised Principal on the transaction.