The arrival of Max Property, the new vehicle of serial entrepreneur Nick Leslau, gave not only a considerable boost to AIM but the market as a whole, since its accompanying placing was oversubscribed and pulled in a plentiful £220 million of new cash.
With Max being the first new listing to raise money on AIM since mid-November, broker Morgan Stanley and joint book-runner Oriel Securities were inundated by a host of institutional investors looking to get in on the action. In the event, these institutions helped the float pull in £20 million more than originally expected.
New York hedge fund Och Ziff led the way, investing £35 million, whilst other blue chip investors range from Blackrock and Fidelity to Aviva, F&C, Schroders and Standard Life. Significantly, management has plenty of skin in the game, having contributed £25 million, with the potential for up to £55 million more if they co-invest in upcoming deals.
‘Back the rider, not the horse’ is the maxim often mooted by those investors that love to follow serial entrepreneurs. In this case, the rider is long-maned property wheeler dealer Nick Leslau. He has long carried a City following, since making his name with landmark deals at property company Burford, where he teamed up with business partner Nigel Wray.
Since then the duo, nicknamed the ‘Glitter Twins’ by the property press, have backed numerous ventures, mostly on AIM, and it is their reputation and experience, along with a management team made up of other long-time associates of their Prestbury Investments vehicle that should see Max Property deliver maximum value.
A Jersey-incorporated property fund, Max will be externally managed by Prestbury, where Mike Brown, until recently the deputy chief executive of fully listed Helical Bar, has been hired to work alongside Leslau and other Prestbury stalwarts.
Max’s board of industry veterans will be marshalled by chairman Aubrey Adams, the former chief executive of estate agent Savills, while the non-executive team includes John Stephen, chairman of top real estate adviser Jones Lang LaSalle. Wray is not seemingly part of the management team, yet as a key player at Prestbury, he will clearly have influence.
Ops in commercial props
Their devilish plan is to exploit the UK property market’s current weakness by making ‘opportunistic’ investments. Max’s focus will be on commercial properties whose value can be increased by bringing on board better tenants, refurbishing the property or being sold on. The intention is to wind the fund up after seven and a half years.
Clearly, as a long-term play and as the company should be able to scrape up bargains at the bottom of the market, the prospects are pretty good. Although the market has not necessarily begun to mount a sustainable climb back up to its former bubbly heights, it is pretty much near rock bottom.
Leslau says that with investment yields now sufficiently higher than borrowing costs, Max should be able to generate ‘attractive’ returns with only ‘relatively modest’ amounts of debt. The assurance is that, in the event of any further downturns in the cycle, his team’s hard-won experience in the property downturn of the early 1990s means they are ‘well positioned’ to source and obtain finance for resilient investments.
Obtaining finance will be made easier by Prestbury’s commitment to co-invest in certain acquisitions and a first-refusal agreement with Och Ziff for any external contributions.
Leslau, who recently exposed a magnanimous streak as one of Channel 4’s ‘Secret Millionaires’, and other investors in the business are already in the money.
Max’s shares have risen from their 100p issue price to 124.5p and unless anything drastic occurs, all its backers should prove long-term winners.