Billionaire Bertarelli bound for Britain

Pharmaceuticals mogul to spend up to £500m with Blackstone and Starwood men.

One of the world’s richest men is backing a new property company set up by two of the UK’s top private equity investors with up to £500m of equity. The family office of Ernesto Bertarelli is understood to have committed £300m-£500m for investment in UK property to Crosstree Real Estate Partners, a company set up Nick Lyle, former managing director of Blackstone and head of the UK, and Sean Arnold, previous head of European acquisitions at Starwood Capital.

Crosstree will invest on behalf of Bertarelli, a Swiss-Italian billionaire who made his money in pharmaceutical companies. Bertarelli was 81st in the Forbes billionaire list this year with an estimated family wealth of $10bn.

He set up and joined the crew of the Alinghi yachting team in 2003, which won the America’s Cup at its first attempt later that year. The team defended the trophy in 2007. Crosstree will invest exclusively on behalf of Bertarelli for three years, after which it could raise further equity from other sources.

Combined with debt, the initial equity should allow Crosstree to build up a UK property portfolio of more than £1bn. The company will pursue an investment strategy of buying the stable and low-risk, core-plus assets usually favoured by wealthy individuals, as well as looking higher up the risk curve at debt recapitalisations and restructurings that are more common to private equity investors.

Unlike private equity firms, which typically manage funds with a fixed term, Crosstree can make long-term investments and hopes to outmanoeuvre rivals to the bank and distressed investor deals that will be brought to the market in coming years.

Bertarelliís investment platform has a Swiss residential and hotel portfolio, but this is the first time it has invested outside Switzerland. He is believed to have been attracted to the UK by the transparency of the market and high-quality assets that need recapitalisation. Crosstree could eventually invest beyond the UK.

Lyle and Arnold have been responsible for some of the highest-profile deals of the downturn. Lyle led the acquisition of a 50% stake by Blackstone in Broadgate for £75m in September 2009, the £480m purchase of Chiswick Park in West London earlier this year and the establishment of of a shopping centre joint venture with Catalyst Capital.

At the bottom of the market, Arnold headed Starwood’s purchase at a very deep discount of bonds in Prologis European Properties, which subsequently shot back up in value and netted the firm a huge windfall. He also led the acquisition of the Cumberland Hotel last year in a joint venture with the Livingstone Brothers.

All parties declined to comment.

19 August 2011 | Mike Phillips | Property Week