EURAZEO TO ACQUIRE A MINORITY STRATEGIC INTEREST IN RHÔNE RHÔNE PARTNERS BECOME EURAZEO SHAREHOLDERS PARTNERSHIP WILL ACCELERATE THE LONG-TERM STRATEGIC DEVELOPMENT OF BOTH FIRMS
Paris, London & New York, November 29, 2017 — Eurazeo, a leading global listed investment company based in Paris and New York, and Rhône, a leading international private equity firm based in New York and London, today announce a strategic partnership. Under the terms of the agreement, Eurazeo will acquire a 30% interest in Rhône in exchange for $100 million cash (€84 million) and 2 million newly issued Eurazeo shares. Eurazeo is a Euronext-listed investment company, with total assets under management of €7 billion. Rhône is a global alternative investment management firm with over €5 billion in assets under management across both its private equity business and its real estate joint venture with WeWork, the global leader in the collaborative workspace industry.
The partnership is predicated on both firms’ like-minded investment philosophy, common and complementary transatlantic heritage, and historical cultural alignment. This is evidenced by the global geographical presence of each firm, anchored by their common European and American heritage and long-standing network of relationships.
The complementary skills and character of each firm will serve to enhance the benefits of the partnership for both firms and their stakeholders, including broadening their scale and scope of investment capabilities and reinforcing and cross-pollinating respective networks.
One Rhône representative will serve as an observer on the Eurazeo Supervisory Board while three Eurazeo representatives will serve on Rhône’s Board of Managers. However, each firm will continue to operate independently and will maintain full discretion over their investment decisions. The transaction will be accretive to Eurazeo. It is expected to close in the first half of 2018 and is subject to regulatory approvals and other customary closing conditions.
Patrick Sayer, CEO of Eurazeo, said:
“We are delighted to partner with Rhône. Together with their world-class investment team, whom we have known for a long time, we share an investment vision and a similar entrepreneurial DNA. This strategic partnership will bolster Eurazeo’s business model and help us grow and transform companies, creating further value for our shareholders.”
Virginie Morgon, Deputy CEO of Eurazeo, added:
“Capitalizing on our unique model that combines permanent capital and third-party money, we have successfully built over the past few years a multi-strategy international investment firm. Today’s transaction with Rhône accelerates this strategy. Beyond the financial investment in a top-performing asset management company, this agreement represents a valuable opportunity to significantly broaden our transatlantic reach and gain access to a wider universe of investors.”
Robert Agostinelli, Co-Founder and Managing Director of Rhône, said:
“Our common bond of culture, history and relationships provide a natural predicate for this important milestone in the firm’s development. We are delighted to become shareholders in Eurazeo, and this partnership will serve to enhance the future prospects of both of our businesses.”
Steven Langman, Co-Founder and Managing Director of Rhône, added:
“While we will continue to operate our firm independently, our shared values and traditions provide an exciting and natural base for this partnership to drive great benefits for our respective investors. We are excited to work more closely with the leading shareholders and management of Eurazeo, many of whom we have known intimately for over 30 years.”
Partners to buy buildings where co-working company leases space
From left: Adam Neumann (credit: Getty Images), Steven Langman and Robert Agostinelli
WeWork and private equity firm Rhone Group raised several hundred million dollars for a real estate investment fund, according to sources.
The partners have already approached New York landlords about buying properties where the co-working company is a tenant, brokers say, although no deal appears imminent. Fundraising for the vehicle, dubbed WeWork Property Investors, is still ongoing.
The Real Deal first reported in October that WeWork was working on an investment fund. Buying into its properties would allow the co-working company to benefit from property appreciation it says it creates as a tenant.
On March 9, the company filed offering documents for four private equity funds — WeWork Property Investors and WeWork Property Investors Funds A, B and B-1 — with the Securities and Exchange Commission. It wasn’t immediately clear which of the funds the partners are currently raising money for. The filings list several WeWork and Rhone executives as fund directors, as Axios first reported.
WeWork declined to comment for this story, citing SEC rules. Rhone did not immediately respond to a request for comment.
Rhone, founded in 1995 by Wall Street veterans Robert Agostinelli and Steven Langman, is a global private equity firm with offices in New York, London and Paris.
WeWork recently landed a $300 million investment from Japan’s SoftBank, reportedly valuing it at more than $17 billion. The company has been signing leases for new co-working spaces in New York at a rapid clip and currently has 38 locations in the Big Apple, according to its website. Earlier this year it shook up its company structure to give it a more corporate shape and hired Starwood Capital veteran Richard Gomel to head its co-working business. The SEC filings list Gomel as one of the investment funds’ directors, along with Gross and CEO Adam Neumann.
Woody Heller, an investment sales broker at Savills Studley, said the fund’s success will depend on whether enough investors trust WeWork’s credit and are fine with buying into properties where it occupies a big chunk of space. But the fund could put WeWork in a good position when it comes to competing for properties: it wouldn’t have to worry about raising money, and it would already have a big tenant lined up (itself). “If I’m them,” he said, “I would be doing it.”