The shopping centres arm of the business will become a real estate investment trust (REIT) called Capital Shopping Centres (CSC) with a market cap of around £2bn. And its London based portfolio will become Capital & Counties (C&C). This will own the developments around Covent Garden and Earls Court and have a market capitalisation of about £1bn. Both companies are expected to start trading on the London Stock Exchange as early as this ummer.
Sir Donald Gordon, who founded Liberty International and still owns a 15 per cent stake, has given his approval for the formation of the two new businesses.
Chief executive David Fischel said: “There will be an improvement as management will be focused on one thing and can do it better. It’s good for shareholders when firms specialise. The demerger will enable to achieve greater value for shareholders over time.”
The split will likely happen in May and will see Fischel take over as boss of CSC and Ian Hawksworth run C&C.
Liberty quashed analyst concerns that the demerger would be followed by another round of fund raising from shareholders. Fischel said it has £300m in cash, some of which will be spent on taking the Earls Court business to the planning stage, and improving sales at the Covent Gardens tourist hub.
Harm Meijer, analyst at JPMorgan, said the demerger made sense.
Liberty International also announced its full-year results yesterday, with profits falling to £91m against £105m in 2008. Although the Group’s loan to value ratio reduced from 58 per cent to 51 per cent the directors say they are confident for the future.
ROTHSCHILD is acting as Liberty’s financial adviser, with Alex Midgen heading up the team. Midgen recently advised Pets at Home on its acquisition by the private equity firm KKR. He also advised on several capital raisings in real estate during 2009, including Workspace, Bellway, Grainger, Songbird Estates and Shaftesbury.
In the same year he was an adviser in the notorious London Merchant Securities merger with Derwent London.
Midgen has spent 16 years at Rothschild and is an M&A banker specialising in real estate.
He was previously a chartered surveyor at DTZ. He graduated with a first from the University of Manchester Institute of Science and Technology and won the 2008 Rainmaker award for most successful consumer and leisure deal originator in the UK private equity mid-market.
Earlier in his career he was involved in selling MEPC to Hermes and GE Capital for £2bn in 2000, and Bryant Homes to Taylor Woodrow for £400m in 2001. In 2007 he advised Wilson Bowden on its sale to Barratt.
The 40-year-old sits on the board of Songbird as a non-executive director.