Another step towards the consolidation of Echo-Archicom Group's residential business
Another step towards the consolidation of Echo-Archicom Group's residential business

The consolidation of Echo Investment and Archicom's residential businesses, resulting in a nationwide developer with greater growth potential, synergies and wider market recognition, is in progress. According to the agreement concluded in April 2023, in exchange for a contribution in-kind of Echo Investment's residential business including, among others, residential development projects, a team of employees and a land bank, Echo will acquire new shares in the share capital of Archicom. In the published Management Board Report, Archicom presented the value of the contribution, estimated by an independent auditor at nearly PLN 830 million.

The assets brought into Archicom will provide a significant strengthening of the company, both in terms of increasing organisational resources and growing its estate, as well as improving the company's competitive position and developing its human potential. The transaction will significantly expand Archicom's business geographically and in terms of products, with its activities so far concentrated in the Wrocław market, where it holds a leading position. Following the change, Archicom will also be present in Warsaw, Poznań, Kraków and Łódź. Consequently, a nationwide developer with a strong position and high potential for further growth will be formed.

According to the valuation obtained, the market value of the in-kind contribution made by Echo Investment is close to PLN 830 million. The proposed issue price at which Echo Investment is to acquire new issue shares in Archicom was set at PLN 36.34 per share, based on Archicom's valuation, performed using the same principles as those applied to the valuation of the in-kind contribution.

'The Polish residential market continues to be very attractive and our ambition is to make the most of its potential. Geographical expansion was one of our business goals we

started it by purchasing plots of land in Poznań, Warsaw or Kraków for our future projects. Together with Echo Investment's residential business, we will "kick into high gear" in our development, expanding our land bank and structures by leaps and bounds and increasing our recognition by being present on the most attractive and promising markets in Poland. In addition to land in cities that are attractive in terms of sales potential, it is also extremely important in our business to have an efficient organisation that implements and commercialises projects. Creating such a structure from scratch is time-consuming and involves high costs, and effects are deferred. In the scenario we are currently executing, we are reducing these risks and achieving favourable effects immediately. Following the transaction, Archicom will rise from its position as a strong but local Wrocław developer to become one of the biggest nationwide developers, with ambitions to become one of the leaders in the near future' says Waldemar Olbryk, CEO of Archicom.

In return for the in-kind contribution, Echo Investment is to acquire 22,825,700 new Archicom shares at the issue price of PLN 36.34, becoming a shareholder in Archicom's capital at the level of 89.30% . In accordance with standard methodologies and in order to ensure full comparability, the valuation of the in-kind contribution and setting the issue price were based on valuations prepared by an independent expert using two methods: the income method - discounted cash flows and the market method, based on a comparative analysis including comparable companies listed on the WSE.

'The consolidation of the residential business will provide Archicom with a nationwide scale with greater growth potential, synergies and wider recognition. This accumulation of professionals, assets and know-how will increase operational capabilities and allow us to deliver even better projects for our clients. The intention of the Echo Investment Group is for Archicom to grow not only in organic terms, but also by taking advantage of capital market opportunities. Moreover, the position of a nationwide leader in the residential sector will translate into greater interest in the company's shares and increase their liquidity, which should lead to the market price being closer to the fundamental value' says Maciej Drozd, CFO of Echo Investment.

The change will bring order to the structure of the Echo Investment Group, with Archicom becoming the residential pillar and Echo Investment further strengthening its position in the commercial property and apartments for rent sectors, as well as through creating mixed-use 'destinations' projects such as Warsaw Breweries and Towarowa 22.

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