MAM talks to Greycoat team

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The Independent Online
THE MANAGEMENT of Greycoat is in talks with Mercury Asset Management (MAM) about a possible buyout of the central London property developer.

MAM, which has a stake in Greycoat's most famous property Tower 42 in the City (formerly known as the Nat West Tower), is expected to make a bid that will see the management retained and offered a share in the equity.

A source close to the deal said: "Although a number of people were prepared to offer management participation, they [Greycoat] are now on the point of doing a deal with a particular institution. The structure of the deal means that management will have participation in the equity."

Greycoat put itself up for sale last week following a hostile pounds 218m bid by Delancey Estates, the property group run by Jamie Ritblat, son of British Land's John Ritblat. The financier George Soros controls nearly 60 per cent of Delancey.

Delancey's all-paper bid was rejected as "derisory" by Greycoat. Analysts say it is looking for a bid of up to pounds 300m for the company, which last week reported a net asset value of 283p per share. The sale process is being arranged by NM Rothschild, with tenders invited by 19 May.

Peter Thornton, the chief executive of Greycoat, said: "It became clear very early on that certain parties going to tender wanted the possibility of retaining some or all of management. Of course we'd prefer someone to retain management and save our jobs, but the highest cash bid will win the day."

Analysts and industry observers said that the deal with MAM, reported in property magazine Estates Gazette, seemed logical and beneficial to both sides.

Ian Henderson, chief executive of Land Securities, one of the companies tipped to enter the bidding, said: "It doesn't surprise me because a number of funds are looking for more direct exposure to property. It's got quite a lot of logic to it."

A property director with a leading life fund said the deal reflected a structural change in property investment in the UK, with fund management houses increasingly looking to absorb property companies into their businesses.

"We've seen it with Hermes taking over Argent and more recently with Pricoa and Arlington, and there'll be more companies seeking to sell themselves to life assurers. It means the listed property sector will shrink," he said.