Melbourne based OFM Investment Group has bought Sydney based specialist property fund manager Century Funds Management for $42.4 million.
Century was formed in 1999 to arrange the syndicated purchase of investment grade property between $10 million and $40 million on behalf of a limited number of private investor clients.
Since 1999, Century has approximately $440 million of funds under management in 21 property funds totalling 26 properties in New South Wales, Victoria and Queensland and represents approximately 850 private investors.
According to Lonsec research, Century have delivered an average total return of 16.8% per annum since January 2000 to December 2005, compared to an 11.5% per annum total return by the Mercer Unlisted Index benchmark over the same period.
“The acquisition of Century Funds Management fits perfectly within our corporate strategy – property is a key asset class in delivering both income and capital growth to our core Over 50s market,” OFM’s newly appointed managing director Chris Martin said.
Century’s managing director John McBain told Australian Property Journal Century’s property funds will be unaffected by the merger and the brand will remain as is.
“There is no need to change the branding, Century has always had close personal relationships with investors and the merger with OFM will value to the business.
“The merger means investors in Century property funds will have the support of a listed entity,” McBain told Australian Property Journal.
Following the acquisition, OFM will have $550 million of property funds under management and over $1 billion in traditional funds management.
As part of the agreement, OFM has paid $26.8 million in cash and $15.6 million in OFM shares to acquire the 100% interest in Century Funds Management Limited.
The acquisition was priced on a prospective PE ratio of 10.3 times forecast 2007 earnings and is expected to be earnings per share positive for OFM.
OFM has declared a special dividend of approximately 9 cents per share, in conjunction with its final dividend for 2006.
Meanwhile, Century Funds Management principals, John McBain and Jason Huljich, who together have a 90% Century shareholding, will indirectly own 9.9% of OFM, with McBain holding 6.3% of the OFM issued capital and Huljich 3.6%.
McBain has also been appointed to the OFM Board and will become an executive director of the group.
In addition, Huljich will be head of property for the OFM Group and will assume responsibility for OFM’s existing property operations.
By Nelson Yap