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Private Equity Firm TPG Capital Near To Closing a $2 Billion Deal

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May 11, 2015

TPG Capital is close to securing a deal to buy the commercial property brokerage Cushman & Wakefield. The deal would see the creation of one of the world’s largest real estate service companies, as the private equity group would merge the company with DTZ Group. It’s reported the deal could be worth around $2 billion.

Breaking the Rumours
Bloomberg was first to report on the possible deal during the weekend. The news agency cited people close to the deal, who told Bloomberg that an agreement could be made public as soon as this week. But the sources also reminded the discussions are still going on and it might be that an agreement isn’t found in the coming days.

Nevertheless, the report was quickly picked up by other news organisations. A possible deal between TPG Capital and Cushman & Wakefield would a big development in the real estate industry, especially as it would help establish a global commercial brokerage company.

The industry is currently largely controlled by CBRE Group and Jones Lang LaSalle, which are the two largest operators in the sector. According to Bloomberg, Brett White, the executive chairman of DTZ Group, has long wanted to rival the two companies and the new deal would help do that.

TPG’s Plan
The private equity firm bought DTZ Group at the end of 2014 from the Australian engineering firm UGL. The deal was worth $1.1 billion and it took some time to finalise the deal, as there were a few payment issues TPG wanted UGL to clear.

TPG also subscribed to the ambition of boosting the company’s stake in the real estate market this January. It helped DTZ Group complete an acquisition of Cassidy Turley, a brokerage company with special interests in the Americas. According to the statement released at the time of the acquisition, the merger helped provide the company with annual revenue of $2.9 billion and lifted the new company in the top three commercial real estate services companies in the world.

DTZ already has a 50% share of the commercial property sales in China. The Cushman & Wakefield deal would help boost the company’s fortunes in the Asia-Pacific region even further.

Private Equity Interest
Cushman & Wakefield announced earlier this year that it is up for sale, as its majority owner Exor wanted to sell its stake. Exor bought its stake in the company in 2007 in a deal worth $625 million, so a $2 billion price tag would be a nice result for the company.

The sale announcement caused immediate interest among private equity firms and TPG Capital would have to fight off a number of firms before it can emerge as a winner. TPG Capital has clearly outlined its interest in creating a new challenger in the commercial property service sector, so Cushman & Wakefield might see it as the best candidate.

The rising property prices around the world have increased the asking price of companies such as Cushman & Wakefield. The property sector has been of a special interest for the private equity sector and it will be interesting to see whether the deal goes through.

In the meantime, you can find private equity deals at DealMarket.

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