In an ASX announcement on Thursday, Cromwell Property Group confirmed it has entered into a binding agreement to sell its European fund management platform for €280 million ($457 million) to Stoneweg SA Group, a Geneva-headquartered real estate investment firm.
The transaction covers all components of Cromwell’s European business. This includes a total acquisition of equity interests in Cromwell EREIT Management and Cromwell European Holdings, a 50 per cent interest in the Cromwell Italy Urban Logistics Fund and a 27.8 per cent interest in the Cromwell European REIT.
According to Cromwell, the deal aligns with the company’s commitment to simplifying the business to transition to a capital-light funds management model.
The departure from the European division will enable Cromwell to focus on its $2.4 billion core portfolio in Australia and New Zealand as it looks for future growth on the horizon.
Cromwell chair Dr Gary Weiss described the strategic advancement as a “turning point” for the firm as it concentrates on driving value in its local asset and funds management business.
“In the current operating environment, numerous options were considered to simplify and de-risk the business, and we believe that this transaction will provide the debt reduction and working capital needed to move forward in a focused and value-accretive way,” he said.
Cromwell chief executive Jonathan Callaghan noted the firm has divested $1.6 billion of non-core assets and investment positions locally and offshore since December 2021 to stabilise the business.
He explained: “This journey has been an extended one due to the complexities involved in undertaking transactions across a number of countries and jurisdictions, with multiple hurdles to overcome. I take this opportunity to thank those members of the Cromwell team who participated in this exercise, especially those who will move to Stoneweg as a result of this transaction.
“I strongly believe that Stoneweg is an excellent match with very little overlap in terms of geographic and asset class focus. We are confident they will be the right custodian for the capital that our platform manages and are well placed, enabling it to support these mandates and funds including the continued growth of Cromwell European REIT.”
Following the completion of the transaction, Cromwell will work alongside Stoneweg to facilitate the transition of business operations. This includes a full separation of the European and Singaporean staff, platforms and systems, which is expected to be completed during FY2025.
