Singaporean sovereign wealth fund GIC has emerged as a major shareholder in Irish housebuilder Glenveagh Properties, which jumped more than 14 per cent on its first day of trading after an initial public offering (IPO).
The share price surge pushed the value of the Dublin-based company from an initial €617 million, after the company raised €500 million in an initial public offering (IPO), to €704.6 million.
The market capitalisation will increase if, as expected, the brokers behind the sale, Credit Suisse and Davy, exercise an option to place an additional 50 million of shares on the market within 30 days of the flotation. The shares were sold in the IPO at a price of €1 each.
Singapore's GIC currently owns 10.2 per cent of Glenveagh, though this will fall to 9.4 per cent, subject to the additional shares being placed, according to a final prospectus on the deal, published on Tuesday afternoon. GIC is also a major shareholder in Irish phone company Eir, having acquired a 20.6 per cent stake in the business last year.
Glenveagh, the first Irish housebuilder to float in two years, has been created through the combination of assets of US private equity firm Oaktree Capital and Maynooth-based builder Bridgedale. Glenveagh's chief executive, Justin Bickle, is an executive at Oaktree and was in charge of the company's Irish real estate purchases in recent years, following the crash. He is set to step down from the US firm at the end of the month.
The prospectus confirmed that Oaktree will hold a 16.5 per cent stake in Glenveagh, when the additional shares are placed. Fidelity International and JP Morgan Asset Management will each own 4.5 per cent. Hedge fund Lansdowne Partners will own just over 3 per cent.
"The response to this IPO has exceeded all our expectations," said Mr Bickle. "I have no doubt that we can make a very substantial contribution to help alleviate the housing problem in Ireland and our work on that programme begins today."
New homes
Glenveagh has set itself a target of building 1,000 new homes a year by 2020, rising to 2,000 over the longer term.
Shares in Glenveagh will be subject to conditional trading until Friday morning, when the transaction goes unconditional and is formally listed on the Irish and London stock exchanges.
In 2015, Cairn Homes became the first Irish housebuilder to float in almost two decades.
"Glenveagh will begin trading with a 3,000 unit land bank and will need to be active in the land market on an ongoing basis as it aims to have in place a rolling five- to seven-year landbank," said Ronan Dunphy, an economist with Investec in Dublin.
“In contrast, Cairn has already secured a landbank that can accommodate close to 13,000 units. Regarding potential output rates, Glenveagh is targeting annual output of 2,000 units by 2023. While this is significantly ahead of Cairn’s guided steady-state output of 1,200 units per annum, we believe thatCairn has the operational flexibility, and land, to increase its output beyond this figure if it so chooses.”
Glenveagh's executive chairman is John Mulcahy, a former senior executive with Nama and Jones Lang LaSalle in Ireland, while its chief operating officer is Stephen Garvey, owner of Bridgedale.
