Relying on a long-term partner bank makes all the difference

07/02/2022

During the second quarter of 2021, real estate giant Vonovia’s launched the acquisition of its rival Deutsche Wohnen. A financial transaction that is out of the norm in many ways, which shows how Vonovia and its banking partner Societe Generale, backed by decades of trusting relationships, have been able to meet all the many challenges that such an operation poses. Back to the details of a European mega-deal of 2021.

When Vonovia asked for a multi-billion euro commitment to fund a transformational acquisition in April 2021, Societe Generale agreed within hours. 

“ “What allowed us to respond so quickly is our proximity to Vonovia for years. Societe Generale is a relationship bank that anchors its commercial ties over time. That is how trust is built. We are not a bank that makes a move and then leaves. We support our customers in the long term, in good times, but also in more difficult times. When there’s a need, we’re there. Knowing the client well, when the transaction started we were able to come back in hours orally to commit on a multi-billion euro ticket, where others took days, if not weeks.” ”

Sven Streiter
Senior Banker

Yet the €30bn purchase’s complexity meant that Vonovia will certainly need capital, but also a complete range of services that only a few banks are able to offer: subscription, merger acquisition, financing, structuring, risk coverage, etc.

In the nine months from Vonovia’s initial request in April to the equity rights issue for refinancing in December, this friendly acquisition went through many twists and turns. A second offer in August will give Vonovia 87.6% of the voting rights. As the bid progressed, Vonovia required among other services M&A advice and acquisition bridge financing ahead of October’s eventual win, followed by bond and equity refinancing.  
 

Support from planning to refinancing

Since Vonovia’s 2013 initial public offering, Societe Generale has supported its growth through a series of acquisitions and equity issues. Notably, that meant the bank built a keen understanding of investor appetite for Vonovia and its credit rating, as well as creating strong relationships between senior individuals all the way to CEO level.

In the critical early stages of 2021’s second August takeover offer, Societe Generale was the largest underwriter of the €20.15bn acquisition bridge financing, as well as the sole structuring and execution bank for a €2.25bn contingent share purchase agreement

Come the refinancing, Societe Generale was joint bookrunner for two takeout bond issues totalling €9bn, as well as global coordinator and bookrunner for November’s €8.1bn equity rights issue. 

“ The outcomes were exceptional; investors were very supportive to get exposure both on the debt capital markets and on the equity capital market side. ”

Sascha Bock
Global Co- Head of Real Estate Investment Banking and Advisory division
A fresh focus for 2022

Illustrating the importance and complexity of the overall deal, several of its components counted individually as landmark transactions. Not only was it one of 2021’s largest European acquisitions, but also it involved the biggest European loan financing since 2016 and the largest European equity transaction since 2017. What’s more, the two debt issues and the rights issue were among the largest ever undertaken by Societe Generale. Over the nine months, more than 100 experts worked on the deal, maintaining the complete confidentiality that is essential

Above all, though, the strong relationship with the bank provided the edge needed for Vonovia to reach its goal. 

“ They wanted to start 2022 with a fresh focus on the future. That was their goal and they achieved it, raising record funding volumes with no hiccups at all. ”

Ralf Darpe
Head of Equity Capital Markets for Germany, Austria and Switzerland

As one of the biggest European acquisitions in 2021, Vonovia’s purchase of its main German competitor, Deutsche Wohnen, would forge a property portfolio of 555,000 apartments worth €95 billion. Importantly, it would gain scale in the critical areas of property maintenance, carbon retrofits and modular construction.