Buwog IPO sees Immofinanz subsidiary valued at €1.3bn
This last week saw the long-awaited IPO on the Frankfurt, Vienna and Warsaw Stock Exchanges of Buwog, the residential housing subsidiary of Austrian-listed Immofinanz. The initial placing was at €13.00 in Frankfurt and Vienna, where after initial oscillations the share is more or less still trading.
The shares were actually placed in a depot for Immofinanz shareholders, in a ratio of 1 Buwog share for every 20 held in Immofinanz, with the number of Immofinanz shares held by individual investors remaining unchanged. The Buwog shares were, in effect, paid out in lieu of dividend, (absent this year, but €0.15 last year) and as expected, the Immofinanz share price has been falling for some time in compensation, although it has since started recovering. The listing of 51% of Buwog gives the new debutant a market cap of €1.3bn, with Immofinanz planning to gradually wind down its remaining holding of 49%.
Immofinanz plans to refocus its efforts on commercial real estate in eastern Europe, while Buwog will concentrate on developing the German residential business. As CEO Eduard Zehetner described it, investors now have the choice of “more risk, and more return (with Immofinanz)” and “none, or very little, risk and therefore somewhat less return (with Buwog)” – while at the same time assuring investors in Buwog that the parent company planned a very “hands-off” approach to managing the residential company.
According to Daniel Riedl, Buwog CEO and Immofinanz board member, “We plan to buy 3,000 to 4,000 apartments annually, preferably without having to raise fresh capital, although we have plenty of access to the capital markets if we need it.” Germany is the only market where real growth is possible, he added, as “in Austria there is just too little movement, and it’s very expensive.” Buwog is currently buying 18,000 units in northwest Germany from RREEF and Prelios, bringing its total holdings up to 53,000 units – shared about equally between Germany and Austria. The goal is to bring the German share up to 75% in three to five years.
As well as buying new residential in Germany, Buwog plans to do project development in Berlin and Vienna – a factor which Riedl said would differentiate Buwog in the minds of Anglo-Saxon investors, in particular from its new German peers, such as Deutsche Annington, Gagfah, and Deutsche Wohnen.