Bertarelli to invest £500m in real estate

Ernesto Bertarelli, the Swiss-Italian pharmaceuticals billionaire, will invest up to £500m ($824m) as initial capital in the launch of a private equity real estate firm being set up by the former UK heads of Blackstone and Starwood Capital.

Mr Bertarelli, who has been listed in the world’s top 100 wealthiest people, will commit the investment as he tries to diversify his family’s wealth into UK and European real estate. With debt, this is expected to amass a property portfolio of close to £1bn.

The investment strategy will be led by Crosstree Real Estate Partners, which will be launched next month by Nick Lyle, former head of Blackstone UK’s business, and Sean Arnold, who led the European operations of Starwood.

The pair is among the best known UK private equity investors, having been part of deals such as the purchase of half of the Broadgate estate for Blackstone as well as numerous debt purchases in the past few years.

Given Mr Lyle’s and Mr Arnold’s record and entrepreneurial background, the Bertarelli family decided to create a property business from scratch rather than just acquire and manage a portfolio.

While initially focused on investing on behalf of the Bertarelli family, Crosstree may raise additional third party equity in either a fund or club format in future. The firm will also consider investing in other regions after an initial focus on acquisitions in the UK.

It comes at a time when some of the larger global private equity groups are looking to expand their franchises in the UK, where the property market has recovered strongly since the crash ended in 2009.

Crosstree will invest across all sectors of real estate in the UK, ranging from private equity-style, higher return deals to safer but lower yielding institutional property.

There is as much as £160bn of property debt in the UK due to mature in the next few years. Crosstree will aim to capitalise on distressed opportunities that might arise from forced sales or refinancings by the banks, and will be able to invest in the debt as well as the equity in property investments made during the boom years.

The Bertarelli family, whose wealth was bolstered by the sale of Serono, the pharmaceuticals company, backed the launch at the end of last year of an asset management group called Northill, which provides equity and seed capital to start-up management groups. The family also owns a small portfolio of residential property and hotels in Switzerland.

18 August 2011 | Daniel Thomas | Financial Times