IPO activity: Winners and losers
Heraclis Economides, managing director, corporate finance, Bridgewell Group.
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Of the 71 properties companies listed in Europe in the year to April 2007, 39 of these listed in London, raising £3.8 billion. London is likely to continue to dominate equity issuance in real estate, benefiting from the growing realization that the public markets can offer a better pricing mechanism for property than the private market.
The wave of IPOs of externally managed property funds has abated, while IPOs of self-managed property companies are on the rise. Since July 2006 the split between these is 50/50.
The geographic spread is becoming more diverse as investors are prepared to accept a higher risk/reward trade-off. Investors are also more discerning, for example, they are less willing to back IPOs that are no more than a recapitalization of a highly leveraged balance sheet or participate in blind pools.
Only 8% of equity raised for IPOs in London in the past year was for UK properties.