IPO activity: Winners and losers
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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. This should get higher given that only 5% of the UK real estate market is held in listed vehicles compared with 10% in the US and 30% in Australia.

The winners among recent IPOs have quickly emerged and many have tapped the markets for more equity – for IPOs since the start of 2005, follow-on offerings in London have now reached £1.5

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