Top property firms’ €30m merger

THE country’s leading property management and facilities management companies have been snapped up by a group of private investors in two deals believed to be worth €30 million.

Irish Estates Management, which controls 25% of the office property management market, will be merged with Vector, which has a 10% share of the facilities management sector, to create a business that employs 180 people and manages property covering 30 million square feet.

The merged company will be controlled by a consortium headed by Niall McFadden, a director of Arnotts and Riverdeep, and which will be 50% owned by a group of 10 institutions, which include Bank of Ireland Asset Management, Davy and Gartmore.

Anglo Irish Bank provided debt funding to finance the deal.

Mr McFadden said the deal made sense because there was considerable overlap in the activities of the two businesses and there would be scope for cross-selling the services of one business to clients of the other. “I am very confident we can leverage the complementary strengths of both companies to execute an aggressive growth strategy,” he said.

Mr McFadden will chair the merged company, while Vector managing director Martin McMahon will become chief executive. All of the existing employees will keep their jobs after the merger.

Mr McMahon said both companies had demonstrated strong growth over the past five years, with year-on-year growth of 25% each year. “I believe this track record will underpin our future success,” he said.

The company plans to seek a listing on London’s Alternative Investment Market (AIM) next year. This will allow the institutions to exit the transaction and achieve the desired return on their investment.

Irish Estates’ previous owner, bank and assurance company Irish Life & Permanent, said it offloaded the company because it no longer fitted with the group’s strategy of focusing on its core businesses.

The company’s portfolio of clients includes Irish Life & Permanent and its property funds, as well as British Land, IDA Ireland, Cosgrove Developments, government departments and University College Cork. Vector’s clients include Hewlett Packard, the Irish Aviation Authority and Shell Ireland.

It will also take care of internet search engine Google’s new European headquarters on Dublin’s Barrow Street.

Mr McFadden said the Irish facilities and property management markets were relatively fragmented, when compared to Britain and Europe. Responsibility for managing buildings had been outsourced in 30% of cases in Britain, while in Ireland the figure was just 10%.

This meant there was “plenty of scope” for third party management companies in Ireland.