Aareal Bank and Advent International to sell Aareon for €3.9bn

September 2024 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

September 2024 Issue

In late June, Aareal Bank and Advent International announced they have agreed to sell Aareon, a European provider of software as a service (SaaS) solutions for the property industry, to private equity firm TPG and investor CDPQ for around €3.9bn.

According to a statement announcing the deal, it is expected to close in the second half of 2024, subject to customary closing conditions and approvals.

Upon completion of the deal, Aareon will be established as an independent company owned by TPG, while CDPQ will be a minority co-investor. Advent, which first invested in Aareon in 2020 when it acquired a 30 percent stake in the company, will retain a minority interest in the standalone business. TPG’s investment in Aareon will come through TPG Capital.

“We are pleased to have found new owners for Aareon who, thanks to their financial strength and pronounced industry experience, are well positioned to propel Aareon into its next major step of evolution,” said Jochen Klösges, chief executive of Aareal Bank and chairman of the supervisory board of Aareon. “Over the past few years, we successfully developed Aareon into a ‘Rule of 40’ company, that has demonstrated impressive organic and inorganic growth. We look forward to maintaining our successful collaboration through our joint venture, First Financial Software, which not only fortifies our long-term partnership with Aareon but also opens up further growth prospects for all parties involved.”

“For many years, we have admired Aareon’s position as a leader in the European property management industry and are thrilled to partner with the Aareon team and our fellow investors to build on the successes of the business as a standalone company,” said Flavio Porciani, a partner at TPG. “The need for comprehensive property management solutions is growing amid a trend towards digitalisation of real estate workflows and an increasingly complex regulatory environment. Aareon’s platform is built to support this evolution, providing owners and managers an integrated, modern system that improves connectivity and streamlines business operations.”

“We are proud to have supported the leadership team and employees of Aareon in their successful transformation, which is culminating in one of the largest software buyouts in Europe in 2024,” said Jeff Paduch, managing partner of Advent International and supervisory board member of Aareon. “The company is well positioned to continue to lead innovation for its customers in the European housing ecosystem and is on a path of sustainable growth with exciting opportunities ahead for all stakeholders.”

“This transaction marks a milestone in the development of Aareon,” said Harry Thomsen, chief executive of Aareon. “Thanks to the strong support of our owners Aareal Bank and Advent International, the company has made excellent progress in recent years. Now, we have reached a point where we can take the next step in our development. We are in an ideal position to capture further growth opportunities and welcome TPG and CDPQ as experienced and strong new partners.”

Following the closing of the transaction, Aareal Bank and Aareon will continue to cooperate and support their clients through their joint venture First Financial Software, which provides specialist expertise around payment software solutions for the property sector and related industries.

According to the statement announcing the deal, the sale of Aareon will lead to a significant gain on sale net of transaction-related costs in Aareal Bank Group of approximately €2bn. Meanwhile, most transaction-related costs of around €150m will already have to be recognised in the second quarter, coinciding with the signing of the transaction. The gain on sale net of transaction-related costs had not been considered in Aareal Bank Group’s previous guidance for the 2024 financial year, which will be adjusted upward. In addition, Aareon will be reported as a discontinued operation according to IFRS 5 starting in the second quarter until closing.

Richard Summerfield