Valad Europe in MBO bid

The senior European managers of Sydney-based real estate fund manager Valad have made an indicative proposal to buy out the €5 billion platform

Valad Property Group, the Australian multi-let property specialist, said last night it had received a proposal for the management buyout of its European business.

In an announcement to the Australian stock exchange, Sydney-based Valad said the “consortium” included Martyn McCarthy, the European chief executive, other senior members of the European management team and Valad Group managing director, Peter Hurley.

Valad said Hurley, who helped establish Valad’s European business and sits on the main board of the Australian group, would take a leave of absence as managing director and from all duties that the board would consider a conflict of interest.

The firm also said that if Valad agreed to sell the platform before 30 June 2012, the net proceeds would be used to reduce bank debt in Duke, a 50,50 property investing joint venture with the UK’s Lloyds Banking Group.

According to the company, Valad Europe had a book value of A$76.7 million (€57.3 million; $76 million) as of 30 June 2010, including goodwill and management rights of A$65.1 million.

No statement was made by the management buyout group last night.

Valad Europe is the largest part of Valad Group, with just over €5 billion of assets under management compared to around €1 billion of assets in Australia and New Zealand.

The Australian newspaper quoted JPMorgan analyst Richard Jones in a note saying “that watching senior management trying to benefit from realising the value inherent in the business could be seen as disappointing”.

“We hope the Valad board delivers a strong outcome for unit holders,'' he said, adding that Valad securities were currently trading at less than 40 per cent of book net asset value.

He added any sale would leave Valad as an Australian and New Zealand business and might be the catalyst for a winding up or sale of the business.

“This may be the best outcome in trying to realise its asset backing,” he said.

PERE spoke with Martyn McCarthy earlier this month about Valad Europe. Click here to read what he had to say: