Shares in Cairn Homes tumbled 7.6 per cent by lunchtime on Wednesday after its co-founders, Michael Stanley, Kevin Stanley and Alan McIntosh, raised €22.78 million by selling a series of shares in the company.
The move in its share price wiped more than €82 million off its market value, which stood at €1.04 billion by 1pm.
The three sold a combined 17 million shares at €1.34 per share in a placing conducted through Goodbody Stockbrokers and Numis Securities. This represented a 5 per cent discount to Tuesday’s closing price.
Market sources suggested the stock’s substantial fall resulted from chief executive Mr Stanley’s share sale in particular given he has recently been conducting an investor roadshow.
“It’s taken investors by surprise,” one broker said.
The stock recorded unusually high volume on Wednesday, with about 7 million shares traded, in addition to the 17 million sold by the company’s founders.
Brokers noted that overhanging Brexit concern has dented Irish equities and is doing the housebuilding sector no favours.
Following the placing, Michael Stanley and New Emerald Limited Partnership – ultimately owned by a discretionary trust of which Mr McIntosh and his wife are the beneficiaries – will hold 2.7 per cent and 5 per cent respectively of the voting rights of the company.
Agree not to sell
All three men have agreed not to sell their remaining shares for a period of six months, subject to certain customary exceptions.
While Mr Stanley is chief executive of the housebuilder, his brother Kevin departed the company on March 1st. Mr McIntosh, who is still on the company’s board, is no longer an executive director at Cairn.
The Stanleys and the McIntosh couple own founder shares in Cairn, some of which convert once a year to ordinary stock that can be traded on the Dublin market, once the company hits targets agreed with the board. The company is mainly active in the greater Dublin house and apartment market.
The placing is expected to be settled by Friday.
