David Bonderman’s TPG Leads Consortium Buying DTZ Property Services For $1 Billion

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The Australian engineering and construction giant UGL has agreed to sell its property services division DTZ to a consortium of private equity investors for a gross enterprise valuation of about US$1.15 billion (A$1.22 billion). DTZ currently employs 24, 000 people in more than 200 offices in over 50 countries throughout Europe, the Middle East, Africa, Asia-Pacific and the Americas. The  company was founded originally in England in 1784, under the name Chesshire Gibson.

Net proceeds from the sale are expected to be around US$1 billion (A $1.05 billion), which will be paid in cash, and the deal is expected to close towards the end of September 2014, subject to the usual conditions, including regulatory approvals, no material adverse change and other business-related conditions.

The private equity group is being led by David Bonderman’s Texas based TPG Capital. The group also includes Hong-Kong based PAG Asia Capital and the Toronto based Ontario Teachers’ Pension Plan.

The agreement for a sale is the outcome of a formal third party involvement process which UGL began four months ago, as it sought to seek an exit from the property services business to focus on its engineering operations, something it has been considering for over a year.

Richard Leupen the Managing Director of UGL said: “Over the last sixteen years, UGL has built one of the leading global property services platforms through both selective acquisitions and investing in organic growth. The sale price reflects the significant value we have created in building a unique platform over this time delivering a highly positive result for UGL and its shareholders. The sale of DTZ to the TPG led consortium will provide the business with the flexibility to undertake its next stage of growth.”

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Under the terms of the sale agreement, UGL will also enter into a transition services agreement to facilitate business continuity and the orderly transfer of DTZ to the TPG Consortium, until August 2015. Goldman Sachs acted as adviser to UGL for the transaction.

Ben Gray, TPG Capital’s Managing Partner for Asia said, “We see a great opportunity in commercial real estate services to create a best-in-class firm servicing clients on a global basis, ”

The Sydney Morning Herald reported this morning TPG first bid to buy the property services group as far back as last November.  TPG’s strategy now may be to build up a global property group on the scale of top US firms CBRE and Jones Lang LaSalle. Brett White, who is a former CEO of CBRE himself, will come on board to help achieve that goal as a non-executive director on DTZ’s board the Sydney Morning Herald reports.

TPG Capital is a leading global private investment firm, with more than US$59 billion of assets under management and offices worldwide. TPG Capital has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings.

The firm has been very active in Asian markets for twenty years and has also made many investments in Australia.

PAG is one of the region’s largest Asia-focused alternative investment managers and currently has US$10 billion in capital under management, with staff and offices in Hong Kong, Shanghai,  Tokyo, Beijing, Sydney, Singapore, Seoul, Shenzhen, and Delhi.

PAG Asia Capital, the private equity strategy of PAG, is currently investing its US$2.5 billion pan-Asian multi-industry buyout fund. PAG also has a solid track record in real estate, completing over 500 real estate related transactions throughout Asia with total investment value in excess of US$20 billion.

The Ontario Teachers’ Pension Plan is one of the largest investment management organizations in the world, with over US$125 billion in assets under management. Teachers’ Private Capital is the private equity investing arm of the pension fund with over US$13 billion in assets under management.

Since its inception in 1991, Teachers’ Private Capital has managed direct private equity investments and co-investments in more than 300 companies and the world, deploying close to US$20 billion in capital.