Villa World bid is no spur of moment idea
INTERNATIONAL group Proprium Capital Partners is believed to quietly have been ‘scoping’ Gold Coast-based housing company Villa World for up to 12 months before making it a target.
All the while the directors of Villa World, which started life above a pie shop 33 years ago, appear to have been in the dark.
It’s believed they only became aware their company might be in the firing line four days before Proprium’s AVID group revealed its hand last month.
That there was a suitor apparently came as no great surprise – Villa World has been a class performer since the GFC and its share register has been wide open.
More of a surprise is that when a bid did come, it involved a world-stage player in Proprium, a six-year old US-based real estate funds manager spun out of Morgan Stanley.
The group, which set up an Australian arm five years ago and quickly bought the Investa Land business, has indicated that if a bid for Villa World goes ahead it will be worth $280 million.
That is, of course, unless the Villa World board decides the bid is under-valuing the company.
Villa World, which floated in 1986, was the sharemarket’s best performer in its early years, lauding shareholders with hefty fullyfranked dividends.
The company, which initially operated from offices above a bakery at the Ashmore Plaza shopping centre, went through a horror few years during the GFC after becoming part of the doomed MFS group and going through two name changes.
At one point in 2009 its shares sank to 7.5c before a five-for-one consolidation – they topped at $2.85 16 months ago.
That’s a reflection of the abilities of a couple of former Sunland Group directors, Craig Treasure and Mark Jewell, in steering the ship and of the team they’ve built around them.
Proprium’s AVID has stepped forward with what’s termed an indicative proposal to pay $2.23 a share, which is roughly the asset backing of each Villa World share.
Success for Proprium, if a bid is formalised, is by no means assured – it needs the support of the Villa World board and then sufficient backing from shareholders.
Then, of course, another bid might surface and put a fly in the Proprium ointment.
In that regard, all eyes will be on Singaporean group Ho Bee, which since December has built a stake of more than 10 per cent in Villa World and has continued to buy shares.
That isn’t enough to block the Proprium camp because, under a scheme of arrangement, it needs either more than 50 per cent of shareholders to support its offer or a ‘yes’ from 75 per cent of the votes cast at a shareholder meeting.
Ho Bee, developer of Surfers Paradise tower Rhapsody, and Villa World have been ‘mates’ since 2017 when they teamed up on an $84-million Melbourne venture.
Meanwhile, Proprium’s timing can’t be faulted – it stepped forward when the Villa World shares were 85c below their late 2017 high as a result of a retreating property market.
Its move also comes when Villa World has substantial forward profits locked in – the company’s sitting on a pile of more than 1100 sales contracts.