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UGL Selling DTZ to Private Equity Buyer Group

Former CBRE Executive Director Brett White To Become Executive Chairman of DTZ
June 16, 2014
The TPG consortium buying DTZ has brought in former CBRE CEO Brett White as a non-executive director on DTZ's board. He will become executive chairman of DTZ in March.
The TPG consortium buying DTZ has brought in former CBRE CEO Brett White as a non-executive director on DTZ's board. He will become executive chairman of DTZ in March.
Global engineering services company UGL Ltd. announced an agreement to sell its DTZ property services division to a private equity-led consortium comprising TPG Capital, PAG Asia Capital, and Ontario Teachers’ Pension Plan in a move intended to back DTZ's ambition to become an international competitor to giants CBRE and JLL.

The consortium will pay approximately $1.215 billion for DTZ, with the deal, which must first be approved by regulators, expected to be completed by the end of September 2014.

The emergence of private equity interest in the DTZ business came as UGL was proposing a de-merger that would have seen the property business split from its engineering and construction operations and operate on a standalone basis. The deal is understood to have been driven by the opportunity in a recovering real estate market to build the business to compete with global giants CBRE and JLL.

According to Australian media reports, the TPG consortium has brought in former CBRE CEO Brett White as a non-executive director on DTZ's board. White will become executive chairman of DTZ in March.

White spent 30 years at CBRE, becoming chief executive in 2005, and is clearly no stranger to major acquisitions most notably in this context having been a lead member of the team which took CBRE private in July 2001 in an $800m leveraged buyout. In 2003, CBRE then bought the Insignia Financial Group and went public again as CB Richard Ellis Group in 2004.

The DTZ sale will see UGL focus on its engineering and construction operations, which it says are increasingly distinct from the property business of DTZ.

UGL has also announced the appointment of a new chief executive, Ross Taylor, who will take over from Richard Leupen in November.

As previously announced on 17 February, UGL has been undertaking a process to evaluate third party interest received in DTZ to determine whether a potential sale of the business is in the best interests of shareholders.

As part of the deal, UGL will also enter into a transition services agreement to help business continuity and the transfer of DTZ to the TPG consortium until August 2015.

UGL chairman Trevor C. Rowe said: "Over the past eighteen months, the board has carefully evaluated various options to determine the optimal corporate structure for UGL, recognizing that UGL is comprised of two distinct and sizeable businesses which operate in different markets, with different geographic focuses and strategic requirements. The Board continues to believe a structural separation of DTZ and Engineering is in the best interests of shareholders, and will be beneficial for both our clients and our people."

Ben Gray, TPG Capital's Asian managing partner, said: "We see a great opportunity in commercial real estate services to create a best-in-class firm servicing clients on a global basis," said Ben Gray, TPG Capital's Asian managing partner."

UGL bought the London-based DTZ in December 2011. At the time, the deal was touted as a way to gain access to China, where DTZ had a sizable geographic presence among international real estate advisory firms.

John Forrester, chief executive of EMEA, thanked UGL for its sponsorship of the DTZ business in the relatively short time frame the two were together.

"They bought a great brand and business, helped to restructure it and turn it around and invested strongly in building out the global platform," Forrester said.

Emergence of Private Equity
Speculation in the Australian media first placed TPG Capital at the front of the queue of potential private equity bidders earlier this year, with Warburg Pincus also rumored to be in the running.

In February of this year Australian support services company UGL first said it was evaluating unsolicited third party interest in DTZ, understood to be from global private equity giants.

That news came after UGL announced plans last year to spin off DTZ as a standalone company again by the end of June 2014.

UGL had announced its intention in August of 2013 to complete a de-merger that would create two standalone Australian Stock Exchange-listed companies.

One - DTZ - would be focused on global property services, and the other on engineering, construction and maintenance services in Australia, New Zealand and Asia.

The Australian support services company's decision to pursue a strategic review back in March of 2013 surprised many in the market as it had only recently bought the DTZ property business.

The Australian media also linked parties including Carlyle Group, Pacific Equity Partners and Blackstone, spurred largely by returning investor confidence in global property markets.

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