Irish Estates and Vector in €30m deal

A group of private and institutional investors led by Arnott's director Mr Niall McFadden is to buy property managers Irish Estates and Vector in a combined €30 million deal.

The consortium announced yesterday that it has agreed to buy Irish Estates from its current owner, Irish Life & Permanent (IL&P), and merge it with Vector, which it is simultaneously purchasing from its management and workers.

Neither side revealed a price yesterday, but industry sources say the total deal is worth more than €30 million. Irish Estates accounts for an estimated €20 million of this.

The consortium consists of private backers and institutional shareholders, including Bank of Ireland Asset Management and Gartmore, who were led by Davy Stockbrokers. Anglo Irish Bank will finance the merged entity.

Yesterday, its chief executive designate, Mr Martin McMahon, told The Irish Times that the new entity would float on London's Alternative Investment Market (AIM) in 2005. It is thought that this could value the company at up to €50 million.

He explained that this was vital to getting the institutions' backing. "You have to give them an incentive," he said.

Mr McFadden made it clear yesterday that its new management intended to pursue an aggressive growth strategy. "There is huge growth coming at the retail side in this country and the developers are going to need someone to manage those properties," he said.

He added that the increasing number of Irish property investors looking to overseas destinations like Britain and Europe would create extra opportunities for the new business.

The new company is also likely to grow by acquiring some of its rivals. With 10 per cent of the Republic's market, it is the single biggest player, indicating that the sector is very fragmented. Industry sources say that this means it will have plenty of scope for acquisition.

Irish Estates is IL&P's property management arm, and the institution began seeking a buyer for it just five weeks ago. It wants to the sell the subsidiary as the group is focused on mortgage lending. The estate manager is not central to these activities.

However, it will continue to manage properties for the institution and its funds, including the ILAC shopping centre and the Irish Life Centre in Dublin.

Other Irish Estates clients include State agencies and Government departments, British Land and Cosgrove Developments. It manages a number of significant properties in the International Financial Services Centre (IFSC).

Last year it made a profit of €1.9 million on a turnover of €5.9 million. It paid a dividend of €1.3 million to its parent.

Mr McMahon founded Vector in 1999 when he led a management buyout of Hewlett Packard's facilities management department. The company specialises in offering technical, environmental and health and safety services to businesses and State organisations.