Birmingham City Council is to sell the NEC in what is set to be the biggest property deal ever seen in the region.
In what could herald the start of a council asset sell off, estimates suggest officials could realise more than £300 million from the sale.
The city council is currently facing financial meltdown – caused partly by a crippling £1 billion bill to settle thousands of equal pay cases.
The landmark announcement includes the NEC, the International Convention Centre, the LG Arena and the National Indoor Arena.
Council leader Sir Albert Bore claimed the decision to sell it would probably have been taken – even had the city not been facing the huge payouts.
He said: “We would probably would have done this in any case.
“The time to bring in new capital investment has come up. We would be putting the growth of the NEC Group at risk if we do not go down this path.”
The Labour leader has been keen over the last year or so to avoid talk of a fire sale of council assets and stop aggressive investors thinking they can pick off the city council’s prize assets for knock-down prices.
He argued that the growth of the NEC Group, which has recently been branching out with a ticket agency, venue management, touring productions and catering businesses, would only be hampered without access to private capital investment.
Sir Albert said: “You have got to understand how we are growing the NEC. Last year we approved the upgrade of the NIA through prudential borrowing, but our capital programme is stretched and we can not come up with the investment figures needed. We would therefore block the growth of the NEC.”
He admitted that after several decades close association with NEC the sale is ‘tinged with sadness’, but added “that is overcome by the thought of an exciting future for the NEC Group”.
The NEC was opened by The Queen in 1976 at a time when few thought it likely an arena and exhibition centre outside London could attract big events.
This week sees the venue again hosting the Crufts dog show, recently international superstar Beyonce sold out shows at the LG Arena and this autumn sees the ICC hosting the Conservative Party Conference for the fourth time in recent years.
The £140 million Resorts World Birmingham conference, casino, hotel, cinema and shopping complex is due to open at the NEC site next year.
The NEC Group is estimated to generate £2 billion a year for the West Midlands, supporting some 29,000 jobs and bringing four million visitors of which 70 per cent are from outside the region.
Both Sir Albert Bore and NEC Group chief executive Paul Thandi refused to put a figure on the sale, although speculation suggested sums in the region of £300 million and rising.
The NEC and LG Arena site will be offered on a long lease, perhaps 100 years, with the city centre assets, the NIA and ICC on shorter 25 year leases, Sir Albert said.
And the council intends to ensure that the existing uses of the various arenas and centres are maintained for a ‘significant’ time to ensure Birmingham continues to attract world class events.
Sir Albert added that a parcel of unused land at the NEC site would be retained by the city council for future development opportunities.
Mr Thandi said that although the group has rapidly expanded in recent years, branching out into new ventures including the running of the Dublin Convention Centre and the expanding Ticket Factory agency, the company now wants to become a major global player in the conference and exhibition market through acquisitions and a wider range of businesses.
He said: “We have got a global reputation and a growing global brand. The city council has been a fantastic shareholder. They showed the vision to put these assets together in the 1970s.
“But we need to realise our ambitions through a different capital risk profile. This will give us the chance to grow the business.”
He explained that a private sector investor is more likely to support the wider range of businesses now developing under the NEC umbrella.
Main areas for growth include the venue management business NEC Group International which after Dublin is looking to take on further convention centres around the world.
Mr Thandi said they are also looking at ‘content’ through its fledging Memoryhaus company – putting together major productions for world arena tours. Meanwhile the Ticket Factory business has recently won contracts to sell tickets for Sky’s sports events and the Royal Horticultural Society’s Chelsea Flower Show.
NEC group chairman Martin Angle added: “The NEC Group comprises four of the best-known and most well-established venues in the UK, located at the heart of England and boasting unrivalled accessibility by all modes of transport. The Group has weathered the challenging economic environment and has a clear vision for its future growth.
“We look forward to working with Birmingham City Council in preparing the NEC Group for this major step forward and believe that its iconic status and portfolio of venues and businesses is likely to attract strong interest from potential buyers, from both the UK and overseas.”
Potential buyers are being invited to take part in pre-qualification process while the sale details are finalised. Gleacher Shacklock LLP has been appointed as financial advisers and Wragge & Co LLP as legal advisers for the sale process.
Expert David Batchelor, executive director of valuation advisory in specialist markets for CBRE, said the interest would come from one of three groups – international operators, opportunity funds or property firms keen to tie up with a long-term operation.
He said the recent sale of the MEN Arena showed there was a market for such property.
He said: “I think the timing is very good for this – the market is aligning with these three groups coming together at once.”