Catella - Exeter transaction highlights PIMs value
EQT buys one of Catella’s peers within PIM If same purchase multiples on PIM, Catella mkt cap. Highlights the value within the property investment space EQT buys one of Catella’s peers within PIM Today EQT announced that it has bought Exeter Property Group, a leading global real estate investment manager with SEK 83bn in AUM (USD ~10bn). Exeter Property Group is a peer to Catella Property Investment Management (PIM). EQT will pay SEK 15.
5bn (USD 1,870m), comprising new EQT shares and cash. For 2020, Exeter is expected to generate approximately SEK 1,121m (USD 135m) in revenues and approximately SEK 664m (USD 80m) in EBITDA. This would indicate an EBITDA margin of 59%.
The value per AUM is hence SEK 183,333 and EQT is paying 23. 4x 2020 EBITDA. If same purchase multiples applied on PIM, Catella mkt cap.
Catella’s Property Investment Management segment AUM is almost 40% higher than Exeter. However, the revenue expected for 2020e is at a similar level, given that Catella’s revenue fee margin level is lower than Exeter (1. 1% vs.
1. 4%). Looking at EBITDA, we estimate that Catella’s EBITDA margin in PIM is at ~26%, which is lower than Exeter at 59%.
Applying the same EBITDA multiple on PIM as EQT paid for Exeter would imply almost 3x the market cap of Catella (and even higher if it were valued on an AUM basis). Highlights the value within the property investment space Given that Exeter is much more profitable than PIM, we of course find it justified that its exit multiples are higher than what PIM would be valued at. However, this transaction clearly highlights the value within the property investment management space.
PIM’s operational performance has been strong in recent years. The AUM, operating profit and profit margin have continuously improved. Over the coming years, we expect the underlying operating profit margin (excluding perf.
fees) will continue to increase. We believe today’s transaction showcases part of the underlying value that Catella’s.
