Bilfinger Bows Out - EQT Takes Full Equity

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• Bilfinger Bows Out - EQT Takes Full Equity

03 June 2016 | Updated 01 January 1970

Bilfinger's has sold its international Building and Facility business to Sweden's private equity group EQT. The transaction remains subject to approval from the responsible authorities. It is likely the new owners will develop the proposition and either go public or sell it on. The business segment focuses on real estate management, contract facilities management and building.

For some time the company had made no secret that it wanted to push this sale through and that there were a number of interested parties (Sodexo, Jones Lang LaSalle and JLL were all rumoured candidates). Bilfinger clearly needs the money to prop-up ailing parts of its core business and boost investment in developing markets for its industrial maintenance services.

EQT (which took ISS from a minor Danish cleaning company to the international force of 500,000 employees it is today) already owned one-quarter of the German business that operates worldwide (including in the UK having made some relatively recent purchases to strengthen its position).

Bilfinger's traditional main focus has been in heavy industrial maintenance with a strong presence in oil, gas and energy production but it had diversified into the facilities realm. Bilfinger will now retreat - and take its sale money - to concentrate on its core business which is suffering due to a variety of economic conditions. The Sale Value is €1.2 Billion with the firm claiming an Enterprise Value of €1.4 billion.

The biggest problems facing what remains of Bilfinger (and that is a considerable proposition) is the austerity in the oil market (brought about by low prices/price wars) and the closing down of German coal-fired power stations (where Bilfinger is the maintainer of choice) as Germany drives forward with alternative energy production. Bilfinger would gladly have sold its operations in these two sectors as well - but no buyer could be found.

The company's chief executive stepped recently without even serving a year as he oversaw a net loss of €489 Million (after a €71 Million loss the previous year) and a suspension of dividend payments.

The new owners

“The sale of the segment generates the greatest value for Bilfinger and opens up new perspectives. With additional liquidity, we will expand our position in industrial services in the process industry,” says Chief Financial Officer Axel Salzmann. “At the same time, Building and Facility gets a growth-oriented investor with proven expertise in the services sector.”

With ISS, EQT grew the company into one of the world’s largest FM companies within a period of ten years and successfully went public in 2014.

Dr. Andreas Aschenbrenner, Partner at EQT Partners and Investment Advisor for the fund EQT VII says: "Under its new ownership EQT VII Building and Facility should continue to grow profitably. The European real estate services market benefits considerably from the growing demand for outsourced property services. Building and Facility is the number one integrated real estate services provider in the German-speaking countries with a strong presence in the UK, Italy, the Netherlands, Poland and Turkey today. The new company will in the future focus on the development of the integrated service offering in its growing European platform.

"The plan is to expand and to grow both organically and through acquisitions in Europe. EQT wants to create the European market leader in real estate services. "

Picture: Deal signed - well not quite but EQT VII Building and Facility will be storming Europe soon

Article written by Brian Shillibeer | Published 03 June 2016

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