Ingenia Communities Group's board has turned away an amended takeover proposal from Warburg Pincus, saying the global buyout firm's A$5.45-a-security offer is not superior to a matching bid from AVID Property Group, which has the backing of a global sovereign wealth fund and a global financial sponsor.

The decision, announced to the Australian Securities Exchange on Wednesday, Nov. 4, keeps Warburg Pincus shut out of the Sydney-based seniors' housing group's books. For investors in Asia, the contest is a live test of how far private capital, including sovereign wealth funds, will stretch for Australian real estate with steady rental income. Ingenia, an S&P/ASX 200 member, operates rental and holiday accommodation aimed at older Australians across 96 communities and development sites.

Warburg Pincus asks for its due diligence back

The two suitors are now level on price. AVID used its matching right on Nov. 2, lifting its non-binding proposal to A$5.45 cash per stapled security, plus any distribution of up to 5 Australian cents for the half year ending Dec. 31, 2026. Ingenia's board judged that offer equal to or better than Warburg Pincus' proposal at the same price, which Ingenia had disclosed on Oct. 28.

On Nov. 3, Warburg Pincus wrote to Ingenia with what the company called a new proposal. The price did not change. The firm instead asked for changes to the process deed it would sign, so that a competing bidder could keep due diligence access for four days after a matching offer is made. It also made the proposal conditional on Ingenia immediately restoring due diligence access for Warburg Pincus and its co-investors, sending AVID a matching-right notice and, subject to AVID's rights, ending its process deed with AVID and signing the amended deed with Warburg Pincus by Nov. 6.

Ingenia's board said the new proposal is not, and could not reasonably be considered to become, a "Superior Proposal" under its deed with AVID. That means the fiduciary exception that would let Ingenia reopen its books to Warburg Pincus has not been triggered, the company said. It added that it will consider any further proposals under the terms of the AVID agreement.

The bidding has climbed quickly. AVID's first proposal, received after the market closed on Oct. 23 and disclosed on Oct. 26, offered A$5.35 plus the same permitted distribution. The Australian Financial Review had reported that Warburg Pincus' dealmakers were pushing for exclusivity with a A$5.25 bid at the time, according to an ASX letter that quoted the article. Ingenia stapled securities closed at A$5.20 on Thursday, Nov. 5, giving the group a market value of about A$2.09 billion, according to ASX data. The A$5.45 price is about 5% above that level.

Leaks draw an ASX query

The contest also drew a query from ASX's listings compliance team. In an Oct. 28 letter, ASX pointed to two Australian Financial Review articles that appeared online minutes before Ingenia's announcements on Oct. 26 and Oct. 28, and said the company may have breached listing rules on continuous disclosure.

According to the letter, the newspaper reported that AVID was working with Brookfield's property team in Sydney. It also reported that Warburg Pincus had teamed up with superannuation fund Australian Retirement Trust and the Lederer family, with ART to take the Ingenia Holiday Parks business, the Lederer family office to take Ingenia Gardens and Warburg Pincus to keep the core land lease communities. Ingenia's own announcements describe AVID's backers only as a sovereign wealth fund and a financial sponsor, and do not name them.

In its reply on Nov. 4, Ingenia said its directors, executives and advisers had confirmed in writing that none of them gave information to the media. The company said it was required by contract to send drafts of the announcements to Peet, AVID and Warburg Pincus (Singapore) before release, and that each is bound by confidentiality. It said it does not know how the information came to be published, and that it has reminded all parties of their obligations.

Peet deal moves ahead

Whoever wins Ingenia will inherit a deal of its own. Under a scheme implementation deed signed on Aug. 26, Ingenia plans to buy all of developer Peet. On Thursday, Nov. 5, Ingenia said it had signed an implementation deed with Bechel Pty Ltd, part of the Brown-Neaves Investments group controlled by Garry Brown-Neaves, for a joint venture over Peet's Flagstone City project.

Under the agreement, Bechel will buy 49.9% of Peet Flagstone City Pty Ltd from a Peet subsidiary, based on an agreed inventory value of A$615 million, if the Peet scheme goes ahead. Ingenia, through a Peet subsidiary, will keep 50.1%, and a Peet unit will manage the development.

Signing the deed satisfies one limb of a condition to the Peet scheme. The joint venture still needs clearance from the Australian Competition and Consumer Commission, which now reviews deals under a mandatory merger regime that has already blocked three transactions. Peet's scheme booklet, dated Nov. 3, was sent to Peet shareholders on Nov. 5.

Warburg Pincus' Nov. 6 deadline for Ingenia to accept its conditions is the next marker. The board has already said the proposal does not meet the superior-proposal test in its deed with AVID.