GRETCHEN FRIEMANN AND BEN WILMOT FKP Property Group is planning to merge two of its managed funds to create a $1?billion-plus retirement vehicle, with a float anticipated in the first half of 2013.
If the plan is approved the new entity will emerge via a back-door listing of the $580?million Retirement Village Group (RVG), which is predominantly controlled by industry super funds such as Hostplus and REST, as well as a pension fund for Dutch doctors.
Investors in that unlisted vehicle are already weighing up a merger with the listed $380?million Forest Place Group, in which manager FKP holds a 85.28?per cent stake.
The ownership of the enlarged vehicle will be split 60-40 between RVG and FPG, producing the largest retirement company on the ASX?200, according to sources familiar with the negotiations. There is also the possibility FKP will funnel its retirement assets in to the new company.
But before an agreement can be sealed RVG needs to placate its syndicate of senior lenders who have demanded a partial repayment of about $186?million in outstanding loans, due to expire in December 2013.
Investors in the wholesale trust are expected to be tapped for an equity raising over the next few months although a hybrid facility has also been mooted.
It is hoped the enlarged vehicle will attract investor support in the same way the overhauled Metlifecare retirement company has in New Zealand. After a three-way merger in May this year – orchestrated by manager FKP – the fund’s share price has rocketed by 51?per cent to $NZ3.17 ($2.52).
However in Australia the listed retirement sector remains strife-ridden with investors jaded by the massive drop in valuations over the past five years.
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FKP Price at posting:
$1.58 Sentiment: Hold Disclosure: Held
