Monday June 15, 10:41 AM
Newriver's $400 mln UK IPO draws good response
By Daisy Ku
LONDON, June 15 (Reuters) - UK property investment firm Newriver Retail's 250 million pound ($413 million) London flotation is attracting good investor response, thanks to its distressed assets strategy, fund managers
said.
The initial public offering on the London Stock Exchange (LSE: LSE.L - news) 's Alternative Investment Market (AIM), arranged by Merrill Lynch (NYSE: MER - news) , is poised to be the biggest in Europe so far this year.
Britain's commercial property prices have fallen about 45 percent since June 2007, but the country's house price index rose 1.2 percent in May from April, the second rise in the last three months, signalling an improving market sentiment for the property sector.
Max Property Group, another newly formed shell company to invest in property assets, last month raised 200 million pounds in an AIM listing and its shares have risen 22 percent since.
'This signals the re-opening of the IPO market; there will be more to come in the second half,' said one London-based equity capital markets banker.
Property deals like Max Property and Newriver may bode well for other IPO candidates in the sector.
London-based property agency Winkworth, which licenses its brand and marketing services to 85 estate agents, aims to list on AIM in the autumn, the Times (1832.HK - news) reported on Monday.
Newriver Retail's shares are expected to start trading on June 24.
The company, chaired by Paul Roy, a former Merrill Lynch banker and run by David Lockhart, the founder of AIM-listed property firm Halladale (LSE: HDG.L - news) , was sold to Stockland of Australia in 2007, and will issue 110 million shares, according to people familiar with the deal.
Fund managers said Lockhart, who managed to sell Halladale 18 months before the market crash, had a good track record.
'These companies don't come with legacy assets. There won't be too much upside in the short term. But there should be good returns in two to four years' time,' said a UK-based fund manager who had bought shares in Max Property and is looking at Newriver's offering.
Investors remain wary of property stocks, however, and many are trading at discounts to their book value.
Only 37 percent of attendees at a European property conference held by Morgan Stanley (NYSE: MS - news) last week reckoned the March 2009 lows would prove to be the trough for property stocks, according to an interactive voting poll.
For a Factbox on the IPO pipeline in Europe, Middle East and Africa, click on
(Editing by Will Waterman)
($1=.6059 Pound) Keywords: NEWRIVER/IPO
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