Two years ago (before Corona that is) I took a flight from Frankfurt, Germany to Medellin, Colombia with AirEuropa (AE) a Spain (Mallorca) based low budget carrier. AE seems to be owned by a family via Globalia Corporación Empresarial S.A. Due to technical issues in Frankfurt our plane was delayed and by the time we reached Madrid the connecting flight to Medellin was gone. So there big confusion and it took some hours for the very scarce staff of AirEuropa to reroute everyone onto new flights and arrange accommodation. For us that was a flight on the new day to Madrid -> Bogota -> Medellin with a night in a cheap Airport hotel close by including transport via bus back an further plus dinner and breakfast. All in all we arrived in Medellin with more than 24 hours delay.
Monday, April 19, 2021
Wednesday, April 7, 2021
Privatization of TLG IMMOBILIEN GmbH 2012 - 2015 Lone Star
Facts & Circumstances:
TLG IMMOBILIEN GmbH (TLG) is a German commercial real estate company which was founded in 1991 after the unification of Germany took over formerly GDR state owned real estate assets. Effective as of December 31, 2012 TLG was taken private in a tender won by Lone Star (LS) for a purchase price of EUR 1.1bln.
German Ministry of Finance Source
Fact Sheet TLG IMMOBILIEN as of before privatization
In a difficult environment LS managed to get TLG IPOed in October 2014 at a price of €10.75, all shareholding was sold off until July 2015.
Since then TLG developed quite well, did grow organically and via M&A and was control over TLG was acquired by competitor Aroundtown in late 2019. The COVID-19 restrictions are hitting commercial (break and mortar) businessses really hard, yet the recovery since the initial shock has been very step. This phenomenon can be overserved throughout the industry and is not TLG specific.
Question:
As a citizen I am always quite sceptical about the benefits of privatizations. So I wanted to find out: How much return did Lone Star make with this transaction.
Analyis:
I analysed the annual report 2013 - 2015 for transactions of/with shareholders and stock prices for share prices. All following values are in kEUR, except stated otherwise
The transaction between TLG and LS amount to the following:
The sale of share by LS in the open market I calculated as follows:
This makes a total calculated gain of EUR 1,216,072k vs. intital investment of EUR 1,100,000k, not taking into account discounting.
The return of EUR 116,072k sounds impressive at first, but if you consider it is equivalent to 10.6% based on capital invested for a holding period of 2.5 yrs and the risks involved is worse than I would have expected. I expect they have loaded up on debt to leverage but at 4.2% ROI p.a. I am not sure if they could debt finance at a much lower rate (back in 2012).
Concusion:
The € 1.1bln sales prices of the Ministry of Finance seems to have been quite a fair price at the point in time and certainly no steal/bargain for LS.