Will Griffin change Echo strategy?

A few weeks ago, Michał Sołowow, the largest single shareholder of Echo Investment – one of the largest development companies in the CEE region, confirmed to sign an agreement with Griffin Topco III (a subsidiary of Oaktree) and a PIMCO fund regarding the acquisition of a 41,55% stake in Echo Investment. Market experts try to answer what will be the future of Echo’s projects after the take over.

Oaktree, managing assets totaling USD 90 billion, is a shareholder in Griffin Real Estate, an investment firm based in the CEE region managing about 120 000 sq. meters of existing GLA, 42 000 sq. meters of in-progress GLA (including the Supersam retail and office complex in Katowice), and a land bank of 400 000 sq. meters. Griffin acquired Oaktree as the partner in March 2013.

Echo has been listed on the Warsaw Stock Exchange since 1996. The company has completed over 100 projects with a total area of over 1 mln sq. meters in Poland and abroad. Two of the company’s ongoing projects are located in Katowice. These are the A4 Business Park office scheme and a retail complex to be build on Kościuszki St. in the southern part of the City.

Two out of three buildings of A4 Business Park have already been delivered. The company did not announce when would the construction work of the last 12 000 sq. meters office facility be commenced. The detailed project of the Echo’s shopping center on Kościuszki St. should be known in the weeks to come.

Analysts expect the new owner will not change the strategy of the successful company and the planned schemes will be implemented. „PIMCO is a global asset fund with good understanding of the Polish market, and we think its intention is to continue developing Echo’s real-estate projects” – said Piotr Zybała, analyst of mBank’s brokerage.

The new owner has also risen to speak about the future of Echo Investment. Griffin has announced that they were not planning to buy a hundred per cent of shares or to withdraw the company from the stock exchange. However, the company will announce and execute a tender offer for acquisition of up to 66 percent of the company’s shares.

Additionally, Griffin declared to continue cooperation with current management board of Echo Investment, but plans to review the company’s strategy and optimize it, if necessary.

To conclude the transaction, Griffin still requires the consent of the European Commission.