Chinese-based local developer Aqualand has made a ‘strategic investment’ in McGrath. The company will acquire a 15 per cent stake over two placements.
The investment will make them the second biggest stakeholder in McGrath, behind founder John McGrath. Aqualand will appoint a director to the board after the acquisition has been completed.
An initial stake of 8.7 per cent has already been acquired by Aqualand. The second placement, conditional on McGrath shareholder approval, will give the company a further interest of 6.3 per cent.
The Australian Financial Review is reporting that the initial 8.7 per cent stake is worth $10.7 million.
According to an announcement from the ASX, McGrath agents will be granted first right to discuss appointment on new Aqualand developments coming to market in future years as agents, but also to provide property management, as part of the agreement.
Aqualand will still reserve the right to decide if a McGrath agent is appointed.
The agreement has an initial term of five years (subject to termination rights) and can be renewed for two further terms of three years each by agreement between the parties. The agreement terminates on a change of control of McGrath, or if John McGrath ceases to have a substantial holding in McGrath and ceases to be actively involved in the management of McGrath.
“The addition of a new strategic shareholder in Aqualand, represents a great vote of confidence in the future of McGrath Limited. Aqualand is one of Australia’s highest quality property development and investment groups and its addition as a major shareholder and board representation provides McGrath the opportunity to continue to grow our Project Marketing expertise and develop even stronger ties with the inbound investment,” said Mr McGrath.
“The Australian real estate market is becoming more sophisticated and relationships and channels are more important than ever before. Working closely with a major shareholder like Aqualand, which owns some of the best residential development sites in the country, represents a great opportunity to grow our business in project marketing,” said McGrath CEO Geoff Lucas.
“The capital raised in the placement will also allow us to take advantage of any strategic acquisition opportunities that arise over the next couple of years. McGrath is currently in a stabilisation and turnaround program and this transaction and relationship underpin our momentum to return to being Australia’s pre-eminent residential property brand.”
Aqualand is one of Australia’s leading residential property development and investment groups. Since founding in Australia in 2014, the company has generated a portfolio of 18 sites with a collective gross development income of $5 billion.
Aqualand CEO said of the investment, ““Aqualand is pleased to enter into this strategic relationship with McGrath. We have observed McGrath for some time and have developed a positive view of the overall business operation and the capability of the McGrath leadership team. We believe McGrath has good potential for future growth and that this growth will only be enhanced by our relationship.”
Most recently, Aqualand was selected alongside Scentre Group and Grocon to jointly develop the $2 billion Central Barangaroo project by the NSW Government.
