IFR International - 28.07.2018

BLUEBIRD BIO SWOOPS UP US$550m

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EQUITIES AMERICAS

Cushman & Wakefield gains strategic push

on US$810m IPO

„ US Vanke Service takes 4.9% stake to propel APAC expansion

CUSHMAN & WAKEFIELD is garnering plenty of

attention from investors on its up to US$810m

IPO.

Vanke Service, a Chinese real estate

conglomerate, staked a 4.9% claim in the

commercial properties operator just two days

into the roadshow through a concurrent private

placement and set off of pricing of the IPO.

Morgan Stanley, JP Morgan, Goldman Sachs

and UBS, along with a hefty syndicate of co-

managers, including minority firms, launched

the deal on Monday morning as 45m shares

were marketed at US$16–$18 apiece.

Vanke disclosed its investment, which would

be sized at 10.2m shares, on Wednesday

morning, providing additional momentum to

the IPO bookbuild. As part of the investment,

the companies plan to explore possible tie-ups

in China.

“This will allow them to accelerate

deleveraging by about one-third of a turn,” said

a banker involved in the underwriting. “If there

was one knock against the company it was debt

leverage.”

Cushman’s net leverage, including the IPO

and Vanke investment, would stand at four

times. Rival commercial real estate operators

Jones Lang LaSalle and CBRE operate

with lower deleverage, at 0.5 and 1.6-times

respectively, because of the cyclicality of

commercial real estate.

Cushman is offsetting the risk of higher

leverage with a lower relative valuation.

The IPO targets a valuation of about 8.5 to

9-times 2019 Ebitda, based on the forecast of

the underwriting banks.

CBRE and Jones Lang LaSalle, by comparison,

fetch 10 and 9.4-times.

INDUSTRY TIES

Cushman CEO Brett White joined in 2015 from

CBRE, providing investor familiarity and the

cache of money made.

The appointment followed consolidation

of the legacy business of DTZ and Cassidy

Turley in 2014 with Cushman & Wakefield the

following year. Cushman also completed 12 infill

acquisitions and expects to close on another two

later this quarter.

“The IPO should be well received,” one banker

involved in the underwriting told IFR. “Cushman

& Wakefield is a benchmark for the economy.

If the economy does well, these guys will do

extremely well.”

Cushman provides facility management

services for 400 office buildings in 70 countries,

encompassing 3.5bn square feet of commercial

real estate.

In 2017, Cushman generated adjusted Ebitda

of US$528.5m on fee revenue of US$5.3bn, with

Americas, EMEA and APAC units contributing

US$344.6m, US$108.8m and US$75.1m,

respectively, to Ebitda.

Nearly half, 47%, of the 2017 revenue is recurring.

In conjunction with the IPO launch, Cushman

released preliminary second-quarter results

calling for adjusted Ebitda of US$169.8m and

fee revenue of US$1.4bn, both strong gains from

the US$130.6m and US$1.39bn reported in the

comparable year earlier period.

Through its legacy of acquisitions, Cushman

does have significant institutional backing.

TPG, PAG Asia Capital and Ontario Teachers,

which purchased the original DTZ business in

2014, will see their combined stakes diluted by

66.2%, with 137.9m shares held subject to a 180-

day lock-up.

Stephen Lacey, Robert Sherwood