10 Aug 2018 | 02.29 pm
Investors Shun Glenveagh Properties Rights Issue
Share price to come under pressure
10 Aug 2018 | 02.29 pm
A rights issue by Glenveagh Properties has flopped badly, with only a third of the shares in the Open Offer taken up by investors.
Glenveagh was aiming to raise gross proceeds of €213 million (€205 million net of fees) through the issue of 74 million new shares to be issued through a Firm Placing, and 111 million shares to be issued through the Placing and Open Offer.
Glenveagh said it had received 37 million acceptances for its Open Offer, or 33.2% of the offer. The remaining 74 million shares will be allocated to investors with with whom they had been conditionally placed under the Placing.
Merrion Capital analysts Darren McKinley commented: “Given today’s Open Offer outcome, ‘institutional and other investors’ are holding 74 million shares that they may or may not have expected to be holding after the poor acceptance of the Open Offer. We would assume that there are possibly 20 million shares in the placing offer that may be held by unnatural owners.
“This is equivalent to 26 days trading volume at 25% of the average daily volume. Glenveagh shares may come under some short term pressure following the EGM next week, as unnatural holders may look to offload in the market post the EGM.”
Glenveagh, led by Justin Bickle (pictured) has a market cap of €765m and recently acquired a land bank of 113 hectares in Tyrrelstown for €65m-€70m, 39 hectares of which are zoned residential.
“A correction toward €1.05 would start to look very interesting from a risk/return point of view,” McKinley added.
When the rights issue was announced in July, Brian Carey wrote in the Sunday Times: “With the appetite of overseas investors to exploit our housing shortage seemingly insatiable, a feverish land grab does increase the likelihood of a property market crash. There is a whiff of dotcom mania here: the land grabs, the first-mover advantage and the eye-popping executive share rewards.
“Oaktree was responsible for bringing Glenveagh to the market. It purchased land in the bust and sold its housing assets into Glenveagh in return for shares. Last week it sold half its stake, some 8.2% of the company, for €63m. It has banked its profit from the bust. It could be that Glenveagh will be hugely successful, and its founders will be as rich as Croesus. Fair play. Or they could eventually blow up, and the founders end up with shares worth a fraction of their current value.”