Private equity swoop
Sigma Capital acquired in £188m all-cash deal
Graham Barnet: ‘powerful combination‘
Sigma Capital Group, the Edinburgh-based residential development and urban regeneration specialist, has been acquired by pan-European private equity specialist PineBridge Benson Elliot in a deal that values the group at £188.4 million.
Each Sigma shareholder will be entitled to receive 202.1p in cash, representing a 35.6% premium to the closing price of 149p per Sigma share on 10 June.
The proposed deal by Six Bidco, a wholly-owned indirect subsidiary of investment funds managed by PineBridge Benson Elliot, follows a decision by Sigma’s directors to appoint Rothschild & Co to review the strategic options and relative benefits of the various routes available to the business to fund its future growth and maximise shareholder value.
The independent Sigma directors believe that the company can continue to execute its current strategy by leveraging its brand, relationships, and expertise.
However, in order to deliver its next phase of growth, Sigma would require consistent access to capital to invest in scale into the UK private rental sector and grow the business through forming new house builder partnerships, expanding operations into new regional markets and widening its rental product offering.
The Sigma directors believe the acquisition will accelerate the delivery of these strategic benefits to Sigma’s business at a rate which would be otherwise difficult to achieve as a standalone AIM-quoted company.
PineBridge Benson Elliot believes that Sigma is a market-leading vertically integrated PRS delivery and operating platform, which benefits from a leading position in the rapidly growing UK single-family rental market.
Having delivered c.5,400 homes to date, Sigma’s platform has recently entered into new long-term partnerships with housebuilder delivery partners and end investors in the UK, with expansion plans to deploy further capital towards new PRS opportunities.
The new owner aims to build on this solid foundation, and intends to continue to grow the business and the success already achieved through Sigma’s partnerships with PRS REIT and EQT Real Estate by providing capital backing, investment, strategic support and expertise in Sigma’s target geographic markets.
PineBridge Benson Elliot has built a track record of acquiring and scaling real estate investments in Europe in close partnership with talented and driven management teams.
It believes the acquisition will bring clear strategic benefits in delivering the shared ambition of developing large scale and high-quality single-family homes at affordable rents in the UK, and that its financial and operational backing could therefore give Sigma greater scale to invest in the growing residential rental market.
PineBridge Benson Elliot is a UK-based, FCA-regulated fund manager with c.$3.2 billion of managed equity and holds a diversified real estate portfolio, currently comprised of office, retail, hotel and residential assets in the UK, France, Germany, Italy, Spain, Belgium and Central Europe.
Founded in 2005 as Benson Elliot Capital Management, Benson Elliot was acquired in December 2020 by PineBridge Investments, a private, global asset manager with $133.0 billion in assets under management (as at March 2021).
Commenting on the acquisition, Graham Barnet, CEO and founder of Sigma, said: ” We are delighted that our independent directors intend to recommend this offer from PineBridge Benson Elliot, having reviewed a number of options from other parties.
“We know the team well and believe that our complementary skills, experience and sector knowledge, as well as PineBridge Benson Elliot’s capital backing, will make a powerful combination, and enable Sigma to expand its activities significantly.
“Sigma has been a pioneer in the delivery of new, single-family homes in the private rented sector, creating an unrivalled property delivery and management platform. We believe we have delivered one of the largest number of new family rental homes in the UK. We also manage the rental of thousands of homes for our partners.
“The need for high-quality, professionally-managed rental homes remains a critical unmet need in the UK, and we look forward to developing our model further in this exciting next step with PineBridge Benson Elliot.”