Greek uncertainty leads to IPO cancellations

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Markets

The uncertainty and renewed volatility on Frankfurt's Stock Market in the run-up to the Greek referendum led to the cancellation of the planned IPO of Israeli-led group Ado Properties, while the proposed flotation of Munich-based pbb Deutsche Pfandbriefbank in mid-July has now also been reported by Reuters as also being delayed. A number of other non-real estate related IPOs scheduled for launch in Frankfurt have also pulled their proposed listings.

The Berlin-focused residential investor, itself part of the Tel Aviv-listed Ado Group, had planned to raise €400m by issuing 21m shares at €20 per share, of which 11m shares were coming from the parent group and a further 10m would be newly issued from a capital increase of €200m. The parent was also offering up to 2.1m additional shares in an over-allotment option designed to retain an ongoing stake in the business, while the free float was targeted at 50% after the flotation.

In Berlin, Ado had been growing rapidly in advance of the proposed flotation, recently buying a further 5,750 residential units for €375m from the listed Deutsche Wohnen AG, and a further 1,300 apartments from another unidetnified fund.

The company's strategy is likely to remain unaltered, assuming it finds an alternative window of opportunity to tap in to still undiminished demand for German real estate exposure among international investors. According to CEO Rabin Savion: “Ado Properties has the clear strategy to create value through targeted investments in its portfolio, privatisations and accretive acquisitions. We aim to approximately doublethe number of units over the next few years to generate value for our shareholders, capitalise on our existing platform and further enhance the efficiency of our operations.”

A report by Reuters also suggested that pbb Deutsche Pfandbriefbank, the 'good bank' hived off out of the nationalised Hypo Real Estate, has also delayed its listing plans while closely monitoring the financial climate for a listing.

Pbb Deutsche Pfandbriefbank had caused a surprise earlier last month when it opted to abandon its 'dual-track' disposal process in favour of an IPO. It announced it would float a minimun stake of 75.1% of the share capital, with the German state retaining at least 20% for a two year lock-up commitment. It had previously been looking at a trade sale of the business, a more usual exit option for bank sales in Germany, which tends to undervalue listed bank stocks.

There was widespread speculation in Frankfurt banking circles that the parent bank in Munich, Hypo Real Estate Holding (HRE), was anxious for a quick sale at any reasonable price. HRE is facing of deadline imposed by the EU to sell pbb by the end of this year.

Pbb wrote €9.0bn in new real estate business last year, a new all-time high for the bank, making it one of the most active lenders in Germany. For this year it intends to slightly exceed that figure, the bank said recently.

Reports in the Wall Street Journal two months ago cited sources as saying that Chinese insurance group Anbang and US private equity firm Blackstone had been holding talks with HRE about a possible takeover of the lender.