Advent and Aareal Bank sell Aareon to TPG for € 3.9 billion
Wiesbaden — Aareal Bank and Advent International (“Advent”) have announced that they have entered into an agreement with TPG and CDPQ to acquire Aareon, a European provider of Software-as-a-Service (SaaS) solutions for the real estate industry. The financial terms of the sale were based on an enterprise value for Aareon of around € 3.9 billion, which corresponds to a valuation of Aareal Bank’s stake in Aareon of around € 2.1 billion. The closing of the transaction is expected to take place in the second half of 2024, subject to the usual conditions and regulatory approvals.
The transaction and partnership with TPG will provide Aareon with access to additional specialized resources and expertise to drive innovation and future growth. TPG will invest in Aareon through TPG Capital, the company’s US and European private equity platform, in a consortium with CDPQ, a global investment group. CDPQ will acquire a minority stake in Aareon alongside TPG as a co-investor. Advent will continue its investment in Aareon and invest new equity for a minority stake in the independent company.
With its property management system, Mainz-based Aareon promotes the efficient and sustainable management and maintenance of real estate. The Aareon portfolio enables seamless, automated end-to-end processes that connect property managers and owners in the residential and commercial real estate sectors.
Jochen Klösges, Chairman of the Management Board of Aareal Bank and Chairman of the Supervisory Board of Aareon AG, said: “We are delighted to have found new owners for Aareon, whose financial strength and extensive industry experience put them in a good position to take Aareon to the next major stage of its development. In recent years, we have developed Aareon into a ‘Rule of 40’ company that has grown organically and inorganically in an impressive manner. We will continue our successful cooperation via our joint venture First Financial Software. This not only strengthens our long-term partnership with Aareon, but also opens up further growth prospects for all parties involved.”
Flavio Porciani, Partner at TPG, said: “We have been enthusiastic about Aareon’s role as one of the leading companies in the European real estate management industry for many years. We look forward to working in partnership with the Aareon team and our co-investors to continue the company’s business success in its future independence. The need for comprehensive property management solutions is growing in view of the increasing digitalization of workflows and the ever more complex regulatory requirements in the property industry. Aareon’s offering responds to this development by providing owners and decision-makers in the property industry with an integrated, modern system that improves connectivity and optimizes business processes.”
Jeff Paduch, Managing Partner of Advent International and member of the Aareon Supervisory Board, commented: “We are proud to have supported Aareon’s management team and employees in the successful transformation leading to one of the largest corporate sales in the European software industry in 2024. The company is well positioned to continue to act as an innovation leader for its customers in the European housing industry ecosystem. Aareon is on a sustainable growth path and offers exciting future opportunities for all stakeholders.”
Harry Thomsen, CEO of Aareon, said: “This transaction is a milestone in Aareon’s development. Thanks to the strong support of our owners Aareal Bank and Advent International, the company has made excellent progress in recent years. Now we can take the next step in our development. We are in an ideal position to take advantage of further growth opportunities and welcome TPG and CDPQ as experienced and strong new partners.”
Even after the transaction, Aareal Bank and Aareon will continue their close cooperation and support their clients together via the First Financial Software joint venture. First Financial Software offers customers specialist expertise in payment transaction software solutions for the real estate industry and related sectors.
Significant gain on disposal after transaction-related costs expected in 2024
The sale of Aareon will result in a significant gain on disposal for Aareal Bank Group, after transaction-related costs of around € 2 billion. This will be recognized upon completion of the transaction (closing), which is expected in the second half of 2024. However, the majority of the costs associated with the transaction, amounting to around € 150 million, will already be recognized in the second quarter when the transaction is signed. The gain on disposal less the costs associated with the transaction was not included in Aareal Bank Group’s previous forecast for the 2024 financial year. This will now be adjusted upwards. In addition, Aareon will be reported as a discontinued operation in accordance with IFRS 5 from the second quarter until closing.
Aareal Bank is well on track to achieve its operating target of € 250 million to € 300 million for the 2024 financial year in the banking business excluding Aareon. The bank alone generated a consolidated operating result of around € 92 million in the first quarter of 2024 and an operating result of € 221 million in the 2023 financial year. The Common Equity Tier 1 capital ratio (Basel IV phase-in) was 19.7% at the end of the first quarter of 2024.
Arma Partners acted as lead financial advisor and Goldman Sachs acted as financial advisor to Advent International and Aareal Bank, CMS acted as legal counsel to Aareal Bank.
Weil, Gotshal & Manges LLP advised Advent International on legal matters.
Morgan Stanley & Co. International Plc acted as financial advisor to TPG and CDPQ and Kirkland & Ellis LLP acted as legal counsel.
About Aareal Bank Group
Aareal Bank Group, headquartered in Wiesbaden, is a leading international real estate specialist. The Bank uses its expertise to identify trends, challenges and opportunities at an early stage and exploit them for the benefit of its stakeholders. Aareal Bank Group offers smart financing, software products and digital solutions for the property sector and related industries, and is represented on three continents — in Europe, North America and Asia. Aareal Bank Group’s business strategy is geared towards sustainable business success, with ESG (environmental, social and governance) aspects as key components.
Aareal Bank AG comprises the Structured Property Financing, Banking & Digital Solutions and Aareon segments. The Structured Property Financing segment comprises Aareal Bank Group’s property financing and refinancing activities. Here she assists clients with large-volume investments in commercial real estate. In the Banking & Digital Solutions business segment, Aareal Bank Group offers comprehensive advisory services and product solutions to companies from the housing and property industries, as well as the energy sector, as a digitalization partner, bundling these with traditional corporate banking and deposit-taking business. The subsidiary Aareon, Europe’s proven provider of SaaS solutions for the property industry, forms the third business segment.
About Advent International
Founded in 1984, Advent International is one of the largest and most experienced global private equity investors. The company has invested in over 420 private equity investments in 43 countries and had assets under management of EUR 84 billion as of December 31, 2023. With 15 offices in 12 countries, Advent has built a globally integrated team of over 302 private equity investment professionals in Europe, North America, Latin America and Asia. The company focuses on investments in five core sectors, including business and financial services, technology, healthcare, industry and retail, consumer goods and leisure. After 40 years in the international investment business, Advent continues to pursue the approach of working with management teams to achieve sustainable sales and earnings growth for its portfolio companies. www.adventinternational.com
About TPG
Founded in 1992 in San Francisco, TPG is a globally active alternative asset manager. The company manages US$ 224 billion in assets and has investment professionals and operations around the world. The spectrum of TPG’s investment strategies is broadly diversified and includes private equity, impact investing, credit, real estate and market solutions. Our unique strategic approach is based on collaboration, innovation and inclusion. Our teams combine in-depth product and sector experience with broad expertise and distinctive skills. This gives us differentiated insights and creates value for our fund investors, portfolio companies, management teams and stakeholder groups. You can find out more about TPG at www.tpg.com.
About CDPQ
CDPQ pursues a constructive investment approach in order to generate sustainable returns over the long term. As a global investment manager, we manage funds for public pension and benefit funds; together with our partners, we build companies that drive performance and progress. We are active in the most important financial markets as well as in private equity, infrastructure, real estate and private debt. As at December 31, 2023, CDPQ had net assets of CAD 434 billion. For more information, visit cdpq.com, our presence on LinkedIn and Instagram, or follow us on X. — CDPQ is a registered trademark of Caisse de dépôt et placement du Québec and licensed for use by its subsidiaries.
About Aareon
Aareon is Europe’s established provider of SaaS solutions for the real estate industry and a pioneer for the digital future of the sector.
By connecting people, processes and properties, Aareon is creating a closely networked real estate ecosystem. Our property management system offers intelligent software solutions for efficiently managing and maintaining properties and digitally integrating all stakeholders. As a reliable and innovative partner, we are passionately committed to sustainable living and working spaces.