Blackstone to buy iQ for £4.7bn

May 2020 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

May 2020 Issue

In what is the UK’s largest ever private real estate transaction, Goldman Sachs Merchant Banking Division and the Wellcome Trust is to sell iQ Student Accommodation to global investment and advisory firm Blackstone for £4.7bn.

Formed in 2006 with Wellcome as a founding investor, iQ is one of the UK’s leading providers of purpose built student accommodation. Wellcome merged with Goldman Sachs’ student housing business in 2016.

Today, Wellcome owns and manages more than 28,000 beds across the UK, with a development pipeline in excess of 4000 beds all located in cities of highest student growth and demand. iQ’s portfolio of purpose-built assets is concentrated in London, where iQ is the largest owner of student accommodation, and other leading UK university cities, such as Manchester, Leeds, Sheffield, Edinburgh and Birmingham.

“I am delighted to be working with a partner of Blackstone’s calibre, as we continue to deliver our ambitious growth plans,” said Rob Roger, chief executive of iQ Student Accommodation. “I would like to thank Goldman Sachs and Wellcome, whose support has allowed iQ to grow into the world-class business it is today – with a market-leading portfolio concentrated in those cities of strongest student demand, and a unique student accommodation experience that sets us apart.”

iQ’s integrated operating platform combines a market-leading focus on customer service and digital innovation, with continuing investment in its high-quality accommodation portfolio.

“Over the course of our ownership, iQ has become the UK’s leading provider of high-quality student accommodation,” said Richard Spencer, managing director at Goldman Sachs. “The company’s focus on customer service and continued investment in the platform has enabled iQ to become a leader in the sector and provide an outstanding experience to students. We are proud to have been part of that journey alongside iQ’s excellent management team and our valued partners at Wellcome.”

Acquirer Blackstone is a global leader in real estate investing. Founded in 1991, Blackstone’s real estate business has $163bn of investor capital under management. The firm is one of the largest property owners in the world, owning and operating assets across every major geography and sector, including logistics, rental housing, office, hospitality and retail.

“This acquisition is a continuation of our strategy to invest in high-quality assets and businesses in the UK and testament to our long-term belief in the UK,” said James Seppala, head of real estate Europe at Blackstone. “British higher education is globally renowned, and we are delighted to invest meaningful capital to support iQ’s further growth and continue to deliver the highest quality accommodation for students across the country.”

Goldman Sachs International, Morgan Stanley & Co. International plc and Eastdil Secured served as financial advisers to the sellers, while Jones Day was legal counsel. Bank of America and Citi served as financial advisers and Savills served as property adviser to Blackstone, while Kirkland & Ellis and Gowling WLG served as legal counsel. The transaction is subject to regulatory approvals.

Peter Pereira Gray, chief executive and managing partner at Wellcome, concluded: “Wellcome has invested steadily in iQ from its inception 14 years ago. Over this time, including most recently in partnership with Goldman Sachs, iQ has grown to become one of the best student housing companies in the UK. I am confident iQ will continue to deliver an excellent experience for its customers under new ownership.”

Fraser Tennant