Terra Firma’s decision to pull the plug on the flotation of Deutsche Annington Immobilien after a cornerstone investor fell away, bringing to an end the two-year investor confidence revival in the German multi-family sector.
Such was the concentration of Deutsche Annington’s order book that after one large investor fell away yesterday the IPO was pulled, according to Financial News, in a reminder of the fragility of Europe’s improving investor confidence.
Yesterday morning, Deutsche Annington reportedly had as much as 80% of the shares up for sale covered, and expected the balance to price between €18 to €21 per share, raising around €1.1bn for the 25% stake in German residential property company put up for sale.
By mid-afternoon, six hours prior to the IPO “postponement” announcement, Terra Firma’s was reportedly looking to reduce the size of the IPO to close the book and complete the flotation, with Bloomberg reporting downscaling to as low as €650m.
However, Deutsche Annington pulled the plug – announcing at 10:15 last night GMT – citing “persistent adverse market conditions”.
The viability of a short extension of the offer period was considered unfeasible given the US 4th of July bank holiday.
Last month, Ben Bernanke, chairman of the US Federal Reserve, said he is considering reducing US’ quantitative easing stimulus package, which fuelled uncertainty over future US interest rates, which, in turn, could negatively impact real estate valuations.
“This decision does not impact Deutsche Annington’s strategy,” said Rolf Buch, CEO of Deutsche Annington Immobilien SE. “Based on our strong financial position, we will focus on driving our operational performance including continuing our investment and modernisation programme as planned.”
Bookrunners for Deutsche Annington’s IPO were JPMorgan Chase & Co. and Morgan Stanley.