Instone flotation to value company at more than €1bn

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German residential property developer Instone Real Estate Group confirmed this month that it planned to go public by listing its shares on the Frankfurt Stock Exchange this year. The IPO, mooted to be for mid-February but almost certainly in the first quarter, is expected to see the company valued at more than €1bn.

Instone said that the placement will comprise new shares from a capital increase, with total gross proceeds of around €150m as well as existing shares from fund holdings by owner ActivumSG Capital Management Ltd. The exact size of the placement has yet to be determined, with Instone planning to invest about two-thirds of the expected gross proceeds to buy and develop new residential projects and the remainder to repay a shareholder loan. Deutsche Bank and Credit Suisse are lead-managing the flotation along with Morgan Stanley BNP Paribas and Unicredit.

Last September, analysts at BNP Paribas assessed the value of Instone's portfolio at €870m. Since then Instone has committed to several further development projects, bringing its end-value to about €3.4bn.

Instone was formed by a merger of Formart, part of German builder Hochtief, which specialist real estate investor Activum bought in 2014 for about €300m, and peer GRK. Last November Instone's CEO Kruno Crepulja had said in response to rumours about a pending IPO that the company was looking at either a public listing or a private placement in the near future, but that "We are neither under time pressure nor do we feel compelled to take any concrete steps in either direction right now."

The current Instone portfolio consists of about 50 projects with about 8,000 residential units, of which about 2,000 have already been sold. The company annually plans, builds and markets an average of 1,000 residential units for owner-occupiers, for private buy-to-let and for institutional investors, and has a workforce of 236 full-time employees across seven branches in Germany.

Private equity group ActivumSG Capital Management became the sole owner of Instone Real Estate in late 2017 with the acquisition of Instone founder and shareholder Steffen Göpel's stake in the German residential developer.

ActivumSG, which was founded by former Cerberus director Saul Goldstein, took full control after buying a majority stake in the company in December 2015. At the time, the company was known as GRK Holding and was later merged with developer Formart under the brand of Instone Real Estate Group.