Monday 5 December 2016

Bono's US firm to reap €18.8m profit

Elevation Partners will benefit from savvy investment as other shareholders in a US property website company see value of stock plunge by 64 per cent

John Reynolds

Published 09/01/2011 | 05:00

ELEVATION Partners -- the €1.46bn US private equity firm co-founded by Bono -- looks set to reap a €18.85m profit from a US property website business. Other shareholders in the property website business, however, have seen the value of their shares plummet by up to 64 per cent since 2005.

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In November of 2005, Elevation Partners invested $100m (€77m) in Homestore Inc, a business that owns a number of leading US property websites, including Move.com, Moving.com, Realtor.com and SeniorHousingNet.com.

Bono and his partners -- who include former Apple executive vice-president and finance chief Fred Anderson -- made the investment in a type of share called convertible preferred stock.

These shares are more lucrative for their owners than ordinary shares (or common stock as they're known in the US) which are listed on the Nasdaq stock exchange.

At the time of the investment, Elevation also agreed a mandatory redemption with the website business, meaning that effectively it has earned a 3.5 per cent dividend on its stake every year -- worth €2.69m -- and will continue to do so until November 2012.

The share price is currently at $2.70 (it plummeted as low as $1.52 during the past year) which would have wiped out 64 per cent of the value of ordinary shareholders' investments.

But Bono and his colleagues have been shielded from this financial pain, which has been wreaked on the share price due to the crash in property prices since the beginning of the global economic crisis in 2008.

In 2012, they will be able to sell their shares back to Homestore for $4.20 -- the same as the purchase price -- having netted a healthy $24.5m (€18.85m) over the seven years.

"This is smart investing to minimise risk. Elevation Partners have structured this investment in such a way as to give great upside, with downside protection," a spokesman for the company said.

U2's the Edge -- although widely reported to have been a co-founder of the firm along with Bono -- had no involvement with the company, the spokesman added.

Elevation Partners saw the value of their 1.5 per cent stake in Facebook soar by €400m last week.

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Perhaps Bono can offer some friendly advice to developer and philanthropist Niall Mellon, whose Kilkenny estate has been on the market since November for €3.75m.

It is one of two properties for sale beside the River Nore near Thomastown. Estate agents familiar with the area recall that in the late Nineties, a wealthy Arab businessman flew over the locality in a helicopter to survey the best properties that might have coveted salmon fishing rights.

The anecdote goes that he landed in front of the next house along the river from Mr Mellon's 242-acre estate. He promptly knocked on the front door and asked the owners if they would consider selling the property. Money was no object, he added, but his offer was politely declined.

It is not known whether he eventually bought a property in the area, but it is thought that he later had his eye on at least one property in Co Waterford.

Mr Mellon, who paid €6.25m for his 242-acre estate, would no doubt be more than welcoming if the gentleman in question happened to return and make an offer for his enviable property.

As it stands, he will make a loss of €2.5m if it sells for €3.75m.

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FOR any anglers seeking a more modest hideaway now that the season is under way on certain rivers, nearby Dangan Cottage also has salmon-fishing rights on the Nore.

The three-bedroom villa-style Regency house is in a delightful woodland setting, according to agents Colliers, and is priced more modestly at €1.2m.

Prospective buyers are continuing to view it and Mr Mellon's property, Colliers say, adding that they recently sold Mamree Lodge, a five-bedroom Georgian property overlooking the Nore -- although without any fishing rights on the river -- for an undisclosed sum. It had been on the market for €1.9m.

On this evidence at least, although the wider market has stalled, there is evidently discreet interest in these unique properties from some fortunate prospective buyers.

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