Wiesbaden-based property lender Aareal Bank set out new guidelines in January for its medium-term strategy, in part prompted by recent media speculation about its relationship with its software subsidiary Aareon, and the recent arrival of an activist investor known for stirring things up.
The bank, one of Germany’s top international property lenders, had come under pressure recently by hedge fund shareholder Teleios Capital Partners to clarify the role being played by software division Aareon in the bank’s overall strategy. Teleios had been urging a sale of the software division, accusing the bank’s top management of being ‘stubborn’and had been calling for an extraordinary general meeting should the bank continue to reject calls for a special independent review.
The software provided by Aareon helps professional landlords manage their properties and rental income streams, and permits customers to lodge rental income with Aareal, which helps Aareal in refinancing itself.
Aareal says it DID evaluate options for Aareon, but in November decided against a majority sale. In a recent statement, Aareal said its new strategy for Aareon is designed to double results over the medium term, by expanding its digital business as well as through acquisitions, and developing more independence from its mother bank as a standalone European real estate software enterprise.
“Aareon is set to significantly speed up its growth momentum in the years to come, and develop a strong independent value proposition as a software company with a standalone market position”, said CEO Hermann Merkens. “It is also clear that we are prepared to embark upon a new path should circumstances necessitate it.”
A recent report in business daily Handelsblatt said that Petrus Advisors, another activist investor group which already held more than 2% (“but less than 3%”- Petrus) of Aareal Bank’s shares and had supported the Teleios call for a hiving-off of the software division (as we reported here in REFIRE in November 2019), was now readying for a new assault on Aareal Bank. The London-based Petrus has just sold its 8% stake in online bank Comdirect for a sizeable profit, and is looking to re-engage with another German bank. In other words, make a sizeable investment.
Petrus Advisers is run by Austrian Klaus Umek and Till Hufnagel, who previously worked together at Goldman Sachs. In Germany, apart from their still-modest shareholding in Aareal, the hedge fund has been an active investor in construction machinery maker Wacker Neuson and pharma company Stada. According to Hufnagel in a recent media interview, his group also has an open short position in automotive supplier Leoni. He said Petrus currently has at least €500m under management, but for the right opportunity, such as with Comdirect, his group could easily bring co-investors on board. (ssk)
