- Subsidiary of H.I.G. Capital, LLC, acquires bond issued by The Grounds over an amount of EUR 10 million
- Funding for investments in ongoing projects of The Grounds
- Equity investment by H.I.G. Capital via a capital increase under review as further option
- Main shareholders of The Grounds grant H.I.G. the right to buy into a future issue of subscription rights in an amount of up to EUR 75 million
- The Grounds intends to restructure the 2021/2024 convertible bond
Berlin, 13 October 2023 – H.I.G. Realty, a subsidiary of H.I.G. Capital (“H.I.G.”), has made funding in the amount of EUR 10 million available to The Grounds Real Estate Development AG (“The Grounds” / ISIN: DE000A2GSVV5) by acquiring a bond that was issued by The Grounds. The transaction was structured as a senior secured bond on the level of The Grounds as parent company and is earmarked for financing investments in ongoing development projects of The Grounds.
In addition, the Management Board and Supervisory Board of The Grounds are mulling the idea to propose a capital increase in a minimum volume of c. EUR 40 million and a maximum of EUR 75 million to the company’s annual general meeting. The current main shareholders, who together hold 73 percent of the company’s share capital, have already agreed to transfer their subscription rights to H.I.G. and to consent to the capital increase in the event of such a scenario. In case H.I.G. decides to exercise its option, the proceeds from the issue of subscription rights are to be used for the further expansion of The Grounds.
As a third pillar of its future funding structure, The Grounds intends to extend the term of its 2021/2024 convertible bond, subject to modified terms and conditions. To this end, The Grounds will convene a meeting of noteholders and propose to them to extend the term of the convertible bond, to adjust the interest rate, to suspend the change of control process to permit H.I.G. to come aboard, and scrap the existing conversion rights. From the perspective of H.I.G., these are key prerequisites for exercising the aforementioned option. The Grounds will directly enter into talks with the noteholders, and announce further details shortly.
In conjunction with this transaction, H.I.G. was advised by Sidley Austin (CE) LLP and by Victoria Partners. Legal counsel to The Grounds was provided by the law firm of Heuking Kühn Lüer Wojtek.
H.I.G. Capital is one of the world’s leading investment entities in the alternative investment sector and domiciled in London. The funds launched and managed by H.I.G. Capital invest in the asset classes of private equity, growth equity, real estate, direct lending, infrastructure, special situations debt and bio-health, concentrating on mid-market companies in this context. H.I.G. Capital employs a team of more than 500 experienced investment professionals worldwide. In the years since 1993, H.I.G. Capital has invested in more than 400 companies in the United States, Europe, and Latin America with a combined revenue total of over USD 52 billion. Today, the equity capital under the management of H.I.G. Capital adds up to approximately USD 59 billion.
Jacopo Mingazzini, CEO of The Grounds, said: “The collaboration with an equity-rich and experienced strategic investment partner like H.I.G. Capital opens up new perspectives for The Grounds, especially in the currently challenging market environment. This is true both for the development of ongoing projects and for the company’s further expansion. So, we very much look forward to the collaboration.”
Riccardo Dalollio, Head of H.I.G. Realty Europe, commented the agreements: “We believe that the German residential market is at an inflection point and should offer numerous investment opportunities and are excited to partner with The Grounds and its strong management team to invest in value-add opportunities with a focus on the Berlin residential market.”