Arcapita, the Bahrain bank that filed for Chapter II bankruptcy proceedings early this year, has decided to scrap plans to float a European property company.
According to a spokesman, Arcapita is now reconsidering its options for PointPark Properties (P3) having initially announced a plan for an IPO on the London stock exchange earlier last month.
No official statement has been provided other than the spokesman confirming that the company had decided the IPO was no longer considered the best option. He also downplayed any suggestion that the company was now to be considered a forced seller of assets.
In documents submitted to the US Bankruptcy Court earlier this year, it is stated that Arcapita decided back in 2010 that an IPO of “EuroLog” was the best way to maximise the value of its portfolio of 46 warehouses in seven European countries, as well as six undeveloped parcels of land and a group of real estate management companies with 69 employees. That route was deemed better than trying to sell parcels piecemeal in the private market.
Work began towards launching an IPO in February 2011, and a date was set for September 2011. However, the turmoil in European equity markets effectively closed the capital markets window, so the floatation was deemed ill advised, the court papers stated.
After a lull, Arcapita then resurrected the plan for an IPO early in 2012, with a summer launch in mind. In early autumn, the firm finally decided there was a window of opportunity, with shares in European property companies having risen around 20 percent since the beginning of the year.
The court documents stated that the assets are encumbered by substantial debt with looming maturities. “The debtors and their advisors have carefully considered a variety of options for addressing these upcoming repayment obligations, including the refinancing the debt and selling EuroLog assets via private sales…By combining the EuroLog assets, which are currently held by several separate funds, into a single investment opportunity, the debtor can capitalise on the increased value of a portfolio that is both larger and more diversified – and therefore more attractive to prospective investors,” said the court documents.
Now that the IPO is scrapped it means P3 will continue to manage the assets rather than use part of the proceeds of a float to buy the properties from Arcapita.
It is a blow for confidence in the European listed property sector. Upon news of the IPO in October, one European GP had said: “If it goes well, my view is that it is very good news because it will be the first IPO in real estate for a long time.”