Today, EfTEN Real Estate Fund III AS and EfTEN Kinnisvarafond AS signed a merger agreement. The merger will create the largest real estate fund in the Baltics, with a total balance sheet of almost 400 million euros. After the completion of the merger, the merging fund will be named EfTEN Real Estate Fund AS, and its shares remain listed on the Tallinn Stock Exchange.
Based on the resolutions of the Supervisory Boards of both funds, the merger will be finalized after the Estonian Financial Services Authority and the General Meetings of both funds have approved the merger. The balance sheet day of the merger will be January 1, 2023. Expectedly, the merger will be finalized in March 2023.
„Current and future investors of both commercial real estate funds will benefit from the merger because risks are more dispersed in a larger fund, and any single asset plays a smaller role in the real estate portfolio. In total, the merged fund’s portfolio will encompass 35 investments in the Baltics in six different commercial real estate segments – offices, trade, logistics, manufacturing, hotels, aged care homes, and the public sector. EfTEN Kinnisvarafond was our first fund, and when EfTEN Real Estate Fund III started investing, the first fund had completed investments. Based on the investment strategy, we speak about very similar portfolios," said Viljar Arakas, CEO of EfTEN Capital, the management company of both funds.
“The merger’s favorable effect can be seen on the stock market too, because with all probability, by market capitalization, the merged fund will knock on the door of the TOP 10 of the Nasdaq Baltic Main List. It means better market liquidity for the share, which will attract the interest of foreign investors. This, in turn, enhances the opportunities to develop and finance real estate investments,” said Arakas.
According to Arakas, the merger of funds was initially planned at the beginning of 2020, but the process was postponed due to the pandemic. In 2020 and again now, the fund management company and the managements of the funds support the view that the merger is in the interest of the shareholders of both funds. After the funds successfully withstood the Covid-19 pandemic, both managements see that now is an ideal time to merge the funds.
During the merger, the investment strategy and risk profile will remain unchanged, and the merged fund will continue to invest and raise capital in the future too.
To complete the merger, the share capital of EfTEN Real Estate Fund III will be increased at the expense of the total assets of the EfTEN Real Estate Fund that will be transferred to EfTEN Real Estate Fund III as a non-monetary contribution, the value of which is the net asset value of the EfTEN Real Estate Fund as of December 31, 2022.
The Stock Exchange announcement about the merger can be found here: https://view.news.eu.nasdaq.com/view?id=b829b092544d73c2aeb2d50341f0291c2&lang=en.
EfTEN Capital currently manages seven real estate funds in the Baltics with 57 commercial properties whose total value amounts to 1.1 billion euros.