Sue-Lin Heng, managing director at Eastdil Secured, has said that overseas investors were unlikely to see value in taking listed companies private, despite market chatter about the current discounts at which property companies are trading.
Heng, who oversees Asian capital in Eastdil’s London office, was speaking today at EG’s Finance & Investment Summit at the British Museum in London. She said her investors were far less likely to take transactional risk on listed companies than setting up their own operating platforms and buying assets directly on a piecemeal basis.
Listen to the discussion in full here
She said: “Why take something private when it’s a lot easier to buy direct assets? With these investors, what’s consistent is that they want boots on the ground – operating companies – in the markets where they are investing. So we will see them investing heavily into operating businesses.”
A number of property companies, such as Helical, Hammerson, Capital & Counties and many more, are trading at a significant discount to net asset value, triggering speculation that they could be subject to M&A activity.
However, Heng suggested that the transactional costs, the premium required for management to sign off a deal, and onerous takeover regulations, would turn off overseas investors in spite of the heavy discounts.
Her views were shared by fellow panellist Patrick Long, managing director at Lazard, who said: “You’d need a willing seller, and it’s not obvious that public companies want to sell. To justify the required premium, you’d need to create a particularly high return, which is a very specific and very rare situation.”
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