Hungry like the Griffin

The transaction to sell a controlling block of shares in the Kielce-based developer is to be one of the largest corporate acquisitions on the real estate market inPolandin recent years. Admittedly the parties have not disclosed the sum to be paid for Echo Investment to change hands, but the speculation on the market is that it will cost around PLN 1.2 bln. However, this is not all. The new investors have announced that a consequence of the purchase of 41.55 pct shares of Echo Investment (it is worth adding that Sołowow’s block included 45.88 pct of the company’s shares) will be a tender to bring the total shareholding up to 66 pct of the company. The finalisation of the transaction is, however, subject to the consent of the European Commission.

There will be changes

The new investors have announce that they are not planning to buy a hundred per cent holding or to withdraw the company from the stock exchange. They assume that the price offered in the tender offer will be “around the minimum price according to the relevant regulations, including the average market price of Echo Investment’s shares over the six-month period preceding the announcement of the tender offer”. They have declared that they intend to continue cooperation with current management board members of Echo Investment, but are planning to review the company’s strategy and possibly optimise it within a few months of the transaction. However, there will be some changes to Echo’s supervisory board. An extraordinary general meeting of the company’s shareholders has been convened for April 13th. Current members of the supervisory board Wojciech Ciesielski, Andrzej Majcher, Mariusz Waniołka, Robert Oskard and Karol Żbikowski are to be replaced at the meeting as a new supervisory board is appointed.

First league player

Echo Investment is one of the largest investment and development companies with Polish capital inEurope. The company carries out projects in four main sectors of the property market: residential construction, shopping centres, offices and hotels. Echo has been listed on the Warsaw Stock Exchange since 1996. The company has completed over 100 projects with a total area of over 1 mln sqm in scores of cities acrossPoland. It has also invested inRomania,HungaryandUkraine. The flagship project of the Kielce-based developer is the Q22 skyscraper, which is currently under construction inWarsaw. In 2014 Echo took out a loan of app. PLN 500 mln for the construction of the 155m office tower. It has also bought the4.4 hasite of the former Warsaw Brewery on ul. Grzybowska in Wola district, paying PLN 170 mln out of its own funds for the property. On the land purchased Echo is planning the construction of development projects with an estimated total area of 100,000 sqm in the next 5–7 years, with four options currently being considered for the development of the parcel. One option on the table is for the construction of skyscrapers.

Voracious opportunity hunter

Griffin, meanwhile, has been one of the most active players on the Polish property market in the last few years, investing in projects and companies on behalf of the funds it manages. Its main investors are entities from Western Europe, theUSand thePersian Gulf. In March 2013Griffinacquired a new strategic investor – Oaktree Capital Management.Griffin’s portfolio currently includes: Hala Koszyki inWarsaw, Dom Handlowy Renoma inWrocław, Supersam inKatowice, Centrum Akademickie Polonez inPoznań, the Green Horizon office building in Łódź as well as other office and retail facilities and large investment plots in Łódź andWarsaw. At the beginning of this yearGriffinannounced that it wanted to acquire the developer Qualia (as reported in the previous issue of the magazine). Griffin Real Estate’s press office informed us in an announcement sent to our editorial office that the acquisitions of the blocks of shares in Echo Investment and Qualia Development, which are subject to the consent of the European Commission in the former case and the Polish Office of Competition and Consumer Protection (UOKiK) in the case of Qualia Development, will not be its only acquisitions this year. “We will be announcing more in the near future. But we are not going to disclose details of the transactions we are planning at this point,” said the company.