Saturday 26 May 2018

Cairn Homes to raise €300m in London stock market listing

Chairman John Reynolds, formerly of KBC Bank
Chairman John Reynolds, formerly of KBC Bank
Peter Flanagan

Peter Flanagan

Cairn Homes will become the first Irish home builder in nearly 20 years to tap the public markets when it lists on the London Stock exchange next month.

The construction firm is likely to announce its plans for an initial public offering by the middle of next week. If all goes according to plan, the shares would then start trading by the middle of June.

Cairn Homes was set up last year and is chaired by former KBC Bank Ireland boss John Reynolds.

It plans to sell at least €300m worth of shares to institutional investors.

Credit Suisse and Goodbody Stockbrokers are advising on the deal, which may also see Cairn take up a secondary listing in Dublin, although that has not yet been decided.

Cairn was launched to take advantage of the need for new homes in Ireland in the years after the crash.

The company has begun work on a site at Parkside, off the Malahide Road in north Dublin, that is earmarked for 433 houses, and a smaller project of 20 homes, known as "Albany" on Killiney Hill in the south of the city.

It has also secured an additional five sites and is negotiations to buy others, mostly around Dublin where the need for new houses is most acute. It also has interests in Co Galway and Co Meath.

The company was set up by chief executive Michael Stanley and Alan McIntosh. Mr Stanley is a former chief executive of Stanley Holdings, while serial investor Mr McIntosh is said to have been involved in the setting up of Punch Taverns, Spirit Group and Wellington Pub Company.

If it goes ahead, the IPO will make Cairn the first Irish home builder to take a public listing in nearly two decades. McInerney Holdings was listed on the Irish Stock Exchange from 1997 to 2010.

Cairn's decision to go for equity financing instead of debt marks a change in the traditional funding model for construction firms.

Up to the crash, firms preferred to seek financing from the banks rather than raise equity, but since the crash lenders have reined in the amount of loans they are willing to provide to developers.

By some estimates, banks will lend at most 66pc of the value of a development project, far below the required percentage for most projects to get off the ground.

The demise of Anglo Irish Bank, which specialised in property lending, has also had a huge effect on the financing for construction.

The stock market performance of Cairn will be closely watched. Property investment firms Hibernia REIT and Green REIT have performed reasonably well since they went public, as has the hotel specialist Dalata.

Hibernia shares have risen 22pc in the past year, while Green shares are up 32pc. Dalata's stock has climbed more than 30pc since it went public.

However there aren't any "pure" Irish construction firms on the public markets at present. (Additional reporting by Bloomberg)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business