Bilfinger division being teed up for re-sale by EQT

Barely two months after buying Bilfinger's real estate services division for €1.2bn, Swedish private equity group EQT looks as if it is already looking for a new buyer for part of the business.

German business magazine Spiegel said in a news report that EQT had asked Deutsche Bank to find a potential buyer for the building construction part of the erstwhile Building and Facility business of the listed Bilfinger, which it bought in June this year.

Several construction groups are thought to be interested in buying, and a deal could be announced as soon as the end of August, the report said. A similar report appeared in the business newsweekly Wirtschaftswoche. Potential buyers mentioned include the Austrian groups Porr and Strabag, and French building group Vinci.

In June when it bought the whole asset EQT said that it would invest in the business and planned to make it Europe's top real estate services firm. The part now up for sale is specialised in constructing retail and commercial buildings.

Dr. Andreas Aschenbrenner, a partner at EQT Partners, commented at the time, “The plan is to expand Building and Facility’s already strong platform by organic growth as well as via acquisitions and to grow stronger than the market in Europe. The intention is to create a European leader in the real-estate services sector and EQT will invest in the company accordingly.”

The loss-making Bilfinger said it had no objections to the division being put up so rapidly for re-sale. A spokesman said, "If we can offer any support, then we'll certainly do that." Bilfinger sold the division after issuing a series of profit warnings and going through four CEOs in the past two years. 26% owner and activist shareholder Cevian had been increasingly pressing the company to make radical structural changes.

The Bilfinger sales agreement with EQT involved two price components that become payable should EQT re-sell the company. Firstly, Bilfinger and EQT agreed on a vendor claim agreement for €100m of the purchase price with annual interest of 10% upon maturity. Additionally, a further €200m portion of the purchase price was structured to be similar to an earn-out. This entitles Bilfinger to 49% of the re-sale proceeds from EQT, giving it an ongoing stake in the business, and which it estimates should give it an expected capital gain of about €500m.