Sigma Capital agrees to £188m private equity takeover

PRS developer Sigma Capital Group has agreed the terms of a £188.4m takeover by private equity house PineBridge Benson Elliot. The deal, which Sigma Capital’s board is recommending shareholders accept, is priced at 202.1p per share, a premium of 35.6% to yesterday’s closing share price of 149p and a near-45% premium to its average over the past six months. The proposed takeover follows a strategic review of AIM-listed Sigma launched late last year, after which Rothschild led a sales process for the business. Announcing the deal, Sigma’s independent directors said the company needs “consistent access to capital to invest in scale into UK PRS product and further grow the business through forming new housebuilder partnerships”, allowing it to deliver “its next phase of growth”. PineBridge Benson Elliot said it plans to help Sigma build on a “solid foundation” that has seen the business deliver 5,400 homes to date and strike new partnerships with housebuilder delivery partners. The private equity firm has already received undertakings or letters of intent to accept the takeover from investors representing 61% of Sigma’s investor base, including Hargreave Hale and River and Mercantile Asset Management Graham Barnet, Sigma’s chief executive, said: “We believe we have delivered one of the largest number of new family rental homes in the UK. We also manage the rental of thousands of homes for our partners. The need for high-quality, professionally-managed rental homes remains a critical unmet need in the UK, and we look forward to developing our model further in this exciting next step with PineBridge Benson Elliot.” Joseph De Leo, managing partner of PineBridge Benson Elliot, said: “Having spent the last number of months growing our understanding of the company’s many strengths and its strategic priorities as it strives to unlock its potential, we believe that the combination of our capital backing, strategic support, deep expertise and track record can be an effective catalyst for achieving Sigma’s growth ambitions over the coming years.” In its own statement on the planned deal, PRS REIT – which is advised by Sigma’s Sigma PRS Management subsidiary – said it expects little change to its relationship with the investment adviser. “The board of PRS REIT is reassured to note that, following the completion of the acquisition, Bidco envisages that Sigma would continue to operate materially in the same way without significant disruption to either the PineBridge Benson Elliot or Sigma businesses and in particular that Bidco wishes to maintain and strengthen Sigma’s key and successful relationship with the PRS REIT,” the REIT said. To send feedback, e-mail tim.burke@eg.co.uk or tweet @_tim_burke or @EGPropertyNews