The three founders of house builder Cairn Homes took €26.6 million off the table on Tuesday by selling a combined 2.1 per cent stake on the market.
Chief executive Michael Stanley, his brother Kevin, who is the company's chief commercial officer, and Scottish accountant Alan McIntosh hired Goodbody Stockbrokers to place the 15.65 million shares. The shares were sold at €1.70 each, less than a 4 per cent discount on their closing price on Monday.
Mr McIntosh – a serial entrepreneur who cofounded UK pub companies Punch Taverns, Spirit Group, Wellington Pub Group – accounted for about half of the Cairn shares sold on Tuesday. Following the transaction, the businessman and his wife continue to hold a 4.7 per cent stake.
The deal saw Michael Stanley’s holding fall from 2.9 per cent to 2.1 per cent as he sold almost €10 million of shares, while Kevin Stanley raised €3.3 million as his interest dipped to 0.9 per cent from 1.2 per cent.
The terms of the share sale valued the remaining combined interest of the three men at €100.6 million.
However, they stand to receive tens of millions of additional shares in Cairn in the coming years under an incentive scheme set up at the time of Cairn’s 2015 initial public offering (IPO), whereby up to 100 million founder shares could be converted into ordinary stock, subject to certain performance targets.
Some 53 million of these founder shares have converted since the middle of last year.
Montrose campus
Cairn has raised more than €720 million of equity in a little over two years, including its IPO and the tapping of shareholders to fund major asset purchases, including a portfolio of residential development loans from Ulster Bank in 2016 and, in July, a prime 8.64 acre site on broadcaster RTÉ’s Montrose campus in Donnybrook, Dublin. The RTÉ deal cost €107.5 million and Cairn plans to build 500 apartments and 10 houses on the site.
“No doubt management will be happy with their success to date, particularly having recouped the bulk of their original investment through this stake sale and having built up a land bank of 12,700 sites,” said Darren McKinley, an analyst with Merrion Capital in Dublin. “Management still have a significant shareholding in the group post this placing.”
Last week Cairn reported that its gross profit surged 191 per cent for the first half of the year as the home builder sold almost as many units in the period as it did for 2016 as a whole and disposed of some unwanted development land.
Gross profit for the first half came to €7.7 million, up €5.1 million on the same period last year, as the company completed 94 sales and revealed it had forward sales on 474 units in place.
The company, which originally floated in London in June of 2015, joined the Irish Stock Exchange in July.
