UPDATE 1-TPG agrees to buy Australia property services firm DTZ for $1.1 bln-source

Fri Jun 13, 2014 3:47am EDT

* TPG consortium includes Ontario Teachers' Pension Plan and PAG

* DTZ's revenue rose 18 percent in six months ended December

* UGL shares are down 3.8 pct so far this year, vs 4.8 pct fall in benchmark index (Adds details on Australian buyout deals)

By Stephen Aldred

HONG KONG, June 13 (Reuters) - A TPG Capital Management-led consortium has agreed to buy the property arm of Australian engineering services firm UGL Ltd for A$1.215 billion ($1.14 billion), a source told Reuters on Friday.

UGL put the unit DTZ, a real estate services company, for sale to cut debt as its main engineering services division faces declining revenues due to a slowdown in the Australian mining sector.

A deal is expected to be signed as early as Friday, bringing to a close a year-long sale process that has attracted interest from a number of private equity bidders including U.S. buyout firm Warburg Pincus.

The sale also underscores the return of strong buyouts market in Asia, spurred by easy credit markets and capital flowing into the region's private equity firms.

As a result, private equity-backed M&As have got off to their best-ever start, with $26.7 billion in deals announced so far this year. That is 21.6 percent more than the whole of 2013, according to Thomson Reuters data.

Private equity firms have invested nearly three times as much in Asia year-to-date as they did in the same period last year, the same data shows.

DTZ provides real estate brokerage and facilities management services, and has operations in Australia, China and the United States. It reported an 18 percent rise in revenue in the six months ended December.

UGL's gearing, as expressed by long-term debt to total capital, is nearly three times the industry average, according to Thomson Reuters data.

UGL shares are down 3.8 percent so far this year, compared with a 4.8 percent drop in benchmark Australian index.

TPG has been working on the deal to buy UGL since February last year, said the source, who declined to be identified as the deal was private.

Dallas-headquartered TPG is seen tapping more co-investment deals around Asia from its recently closed $3.3 billion Asia fund. The firm previously brought Shanghai Fosun Pharmaceutical into its $461 million buyout of U.S.-listed China healthcare firm Chindex International Inc.

TPG's consortium partners include Hong Kong private equity firm PAG and Canada's Ontario Teachers' Pension Plan (OTTP), the source added.

UGL was not available for immediate comment, while TPG and PAG declined to comment. OTPP could not be immediately reached for comment. ($1 = 1.0620 Australian Dollars) (Reporting by Stephen Aldred; Additional reporting by Byron Kaye in SYDNEY; Editing by Denny Thomas and Ryan Woo)

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