Echo Investment acquires a controlling stake in Archicom, leading developer in Wrocław
Echo Investment will take over a majority stake of the Wrocław-based Archicom company from its founders. Once the transaction is finalized, the Echo-Archicom group will be the largest residential developer in Poland – only in 2021 it will start the construction of 7,000 apartments for sale and rent. The acquisition is in line with Echo Investment’s strategic goal of becoming a nationwide leader in the residential sector.
Echo Investment has signed a preliminary agreement for purchase of a 66% stake in Wrocław-based Archicom. The company has a total of 5,700 units in its current portfolio thereof 3,800 in a land bank in Wrocław and Kraków. The design office which Archicom originates from and the remaining assets in other cities are not the subject of the acquisition.
Echo Investment is a leading real estate developer in Poland, the only developer with an extensive experience in main sectors of the real estate market: commercial and residential for sale, as well as for rent. Echo Investment has been listed on the Warsaw Stock Exchange for 25 years. Since 2019 the majority owner of the company has been WING, one of the largest real estate companies in Hungary.
„Our group is becoming the largest developer building apartments for sale and rent in Poland. Only in 2021, we will start construction of 7,000 apartments and having a joint existing landbank exceeding 15,000 apartments for sale to be able to start projects in the coming years. In this transaction, we see many synergies, development opportunities and exchange of know-how. The strong brand of Archicom gives our group a leading position in an extremely attractive market, such as Wrocław. We fundamentally believe in the potential of the Polish residential market, which is more resistant to cyclical fluctuations and less capital-intensive. It is worth emphasizing that we intend to keep our business diversified. We will remain active in the commercial sector, maintaining our position amongst top 3 office developers”, says Nicklas Lindberg, CEO of Echo Investment.
“The transaction is the result of long-term analyses of strategic options review, which shows that joining forces with the nationwide developer Echo Investment is the optimal scenario for Archicom. We join a market leader with a geographically and product-diversified offer. The marriage of the two companies is a guarantee of the stability of Archicom’s position. For years, we have been observing Echo Investment’s innovative approach to co-creating cities, customer service and innovation. By joining forces, we will be able to offer our customers even more,” says Tomasz Ślęzak, Archicom’s Board Member.
Archicom has been operating mainly on the Lower Silesian market since 1986, and since 2016 it has been listed on the Warsaw Stock Exchange. It grew out of a family design office with 160 completed investments, including the revitalized Browary Wrocławskie complex, the multi-award-winning Olimpia Port estate, as well as the first exclusive Platinum Lofts in Wrocław. Archicom is a strong, recognizable brand with almost a 15% share in the Wrocław residential market. Both companies will operate under a common strategy and in one capital group. The combination of the forces of both companies strengthens the group’s position of the strongest developer with the greatest potential in Wrocław.
“For over than 30 years Archicom’s owners have been building up a unique experience and market share in the Wroclaw market. By integrating Archicom into the Echo structure, we are sure we can continue growing consistently to even bigger market share,” adds Nicklas Lindberg.
In 2020, Echo Investment started the construction and sale of apartments in 9 projects, which increased the offer by over 1,500 apartments. The developer sold 1,570 apartments and was one of the few companies on the market to increase sales by 16%. Archicom, by selling in 2020 nearly 1,000 apartments in Wrocław alone, has strengthened its leadership position. Together, Echo Investment and Archicom have approx. 4,000 apartments under construction and over 15,000 in the land bank to be implemented in the next 3-5 years.
“The Polish residential market is consolidating, large entities are considered more reliable and stable. Moreover, it is much easier for strong companies with ample financial resources to negotiate with suppliers and to successfully compete for large plots of land on which whole city quarters can be built. Acquisition of Archicom contributes in a major way to building shareholder value through exceptional growth of Echo residential business,” says Maciej Drozd, CFO of Echo Investment.
Echo Investment has been building and selling apartments for 25 years. The company has already completed 89 residential projects with nearly 10,000 units in several major Polish cities. Echo Investment has been investing in Wrocław for over 15 years. The developer has so far built and delivered over 1,000 apartments to Wrocław residents, including an estate at Przy Słowiański Wzgórzu street, Grota-Roweckiego 111 or the Ogrody Graua projects. The company has also built Pasaż Grunwaldzki shopping center and 7 modern office buildings: a complex of 2 buildings Aquarius, Sagittarius Business House, Nobilis Business House, West Gate, West Link and the first stage of the West 4 Business Hub complex. The MidPoint71 project at Powstańców Śląskich street is currently under construction.
JLL, EY, Dentons and cmT advised Echo Investment in this transaction. The condition for its closing is obtaining the consent of the antimonopoly office.
Source: Echo Investment