GSW Immobilien has postponed its planned IPO for this Friday, citing ‘significantly increased volatility and uncertainty in global equity markets’.
GSW Immobilien has postponed its planned IPO for this Friday, citing ‘significantly increased volatility and uncertainty in global equity markets’.
According to GSW spokesman Thomas Rücker, ‘recent macroeconomic developments unrelated to GSW have resulted in a significant deterioration of the capital market environment,’ he said in a statement. He declined to provide further details. However, listed German real estate companies have also seen their share prices fall over the past week, which is likely to have exacerbated the situation.
Several IPOs worldwide have been shelved in recent days as the MSCI World Index of equities tumbled by the most in three months, amid growing concerns that more European countries will be ensnared by Greek’s debt crisis. S&P has cut Spanish debt one notch to AA with a negative outlook, warning that the fallout from the housing bust is likely to keep the country trapped in near slump until 2016. Portugal is also facing problems - spreads on 10-year bonds have risen to 330 points, higher than the level that first prompted Athens to invoke aid.
GSW’s shares had been offered in a range of EUR 15 to EUR 18.50, or a discount of up to 30% on the company’s estimated net assets. Around 15.3 mln shares were offered. An additional 3.7 million shares could also have been offered, if demand had been high enough. Another 9.3 million shares could have been placed on the stock exchange within the framework of a capital increase which could have amounted to EUR 140 mln. Including this, the IPO could have bought in up to EUR 524 mln.
‘It seems the discount of up to 30% was not enough, given the current capital market environment. As they are not under pressure I think it is the right decision,’ said Martin Braun, a partner at Cushman & Wakefield in Frankfurt.
GSW comprises almost 50,000 apartments over 3.1 mln m2 in Berlin, valued at around EUR 2.6 bn. It also manages an additional 17,000 apartments for third parties. State-owned from its inception in 1924, it was sold to Cerberus and Goldman Sachs' Whitehall funds in 2004, in a bid to reduce Berlin’s debt. At the time of the sale, Berlin said that not more than 49% of GSW could be floated and that such a flotation could not take place until 2014. However, in recent weeks, both the Senate and the Lower House in Berlin have voted to lift the restrictions to allow a full flotation.