Key Takeaways
- • Avid Property Group made an unsolicited, non-binding indicative proposal of $5.35 per security for Ingenia Communities Group, valuing the ASX-listed company at $2.18 billion, topping Warburg Pincus' latest bid of $5.25 (around $2.14 billion as at October 20).
- • Ingenia's board entered a process deed with Avid and granted a six-week period of soft exclusivity, blocking Warburg Pincus from its data room, though Ingenia warned there is no certainty the proposal will become binding.
- • Avid's offer is conditional on unanimous Ingenia board support, satisfactory due diligence and Foreign Investment Review Board and other regulatory approvals, and requires Ingenia to cancel its proposed $900 million acquisition of Peet.
- • Avid is backed by Proprium Capital Partners, which is partnered with Abu Dhabi's Mubadala Investment, and a global financial sponsor tipped in media reports as Brookfield.
- • Warburg Pincus has made three failed bids, rising from $4.75 to $5.05 and then $5.25 per security, after Ingenia rejected each as undervaluing the company.
Summary
Avid Property Group has entered the contest for Ingenia Communities Group, the Sydney-based over-55s community and holiday park developer and operator listed on the ASX, after Warburg Pincus made three unsuccessful attempts to acquire the company. The US private equity firm's first unsolicited proposal, made in early September at $4.75 per security, valued Ingenia at $1.94 billion. Ingenia rejected the offer, saying it substantially undervalued the company, and noted that the bid rested on the company scrapping its proposed $900 million acquisition of Perth-based residential developer Peet, which Ingenia described as an important component of its strategy. Warburg Pincus raised its bid two weeks later to $5.05, valuing Ingenia at $2.06 billion, and then to $5.25, or around $2.14 billion as at October 20. Each was rebuffed.
Avid's entry was made on October 26 with an unsolicited, non-binding indicative proposal of $5.35 per security, valuing Ingenia at $2.18 billion. Avid is backed by Proprium Capital Partners, whose owner is partnered with Abu Dhabi's sovereign wealth fund Mubadala Investment, and by a global financial sponsor that media reports have tipped as Brookfield. The offer is conditional on unanimous Ingenia board support, satisfactory due diligence and approvals from the Foreign Investment Review Board and other relevant bodies. Avid also intends to transfer Ingenia's holiday parks business to Tasman Holiday Parks in a restructure, and its proposal requires Ingenia to cancel the Peet acquisition.
Ingenia's board responded more favourably to the latest proposal. After what it described as careful consideration, the board entered a process deed with Avid and granted a six-week period of soft exclusivity, during which Warburg Pincus has been blocked from accessing the data room. Ingenia cautioned that there is no certainty the indicative proposal will lead to a binding offer. The company's shares rose to around $5 on October 26, their highest level since January, following strong results for its latest financial year. Ingenia operates a portfolio of more than 16,400 homes, villas, cabins and sites.
For Warburg Pincus, the setback follows its attempt to enter the Australian market through its Kiō Investment Management partnership, where a conservative approach focused on logistics has reportedly underwhelmed the market. Avid, which has had a strong year securing approval for two land lease communities adding 600 homes to its South-East Queensland pipeline, pulled out of a 1,900-home project in South Australia earlier this year. The group previously acquired residential developer AV Jennings last year, bringing its footprint to 69 projects totalling 16,000 land blocks and a gross revenue pipeline of $7 billion.
Avid's entry was made on October 26 with an unsolicited, non-binding indicative proposal of $5.35 per security, valuing Ingenia at $2.18 billion. Avid is backed by Proprium Capital Partners, whose owner is partnered with Abu Dhabi's sovereign wealth fund Mubadala Investment, and by a global financial sponsor that media reports have tipped as Brookfield. The offer is conditional on unanimous Ingenia board support, satisfactory due diligence and approvals from the Foreign Investment Review Board and other relevant bodies. Avid also intends to transfer Ingenia's holiday parks business to Tasman Holiday Parks in a restructure, and its proposal requires Ingenia to cancel the Peet acquisition.
Ingenia's board responded more favourably to the latest proposal. After what it described as careful consideration, the board entered a process deed with Avid and granted a six-week period of soft exclusivity, during which Warburg Pincus has been blocked from accessing the data room. Ingenia cautioned that there is no certainty the indicative proposal will lead to a binding offer. The company's shares rose to around $5 on October 26, their highest level since January, following strong results for its latest financial year. Ingenia operates a portfolio of more than 16,400 homes, villas, cabins and sites.
For Warburg Pincus, the setback follows its attempt to enter the Australian market through its Kiō Investment Management partnership, where a conservative approach focused on logistics has reportedly underwhelmed the market. Avid, which has had a strong year securing approval for two land lease communities adding 600 homes to its South-East Queensland pipeline, pulled out of a 1,900-home project in South Australia earlier this year. The group previously acquired residential developer AV Jennings last year, bringing its footprint to 69 projects totalling 16,000 land blocks and a gross revenue pipeline of $7 billion.
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