Lone Star hires Davy for €300m-plus Irish homebuilder IPO

Transaction would see key sites acquired at knock-down prices in Ireland rolled into the new company

Davy will work alongside US investment bank JP Morgan on a Dublin and London stock market flotation of the business, sources say,  which will be led by Patrick Durkan of Durkan Residential. Photograph: Dara Mac Dónaill

Davy will work alongside US investment bank JP Morgan on a Dublin and London stock market flotation of the business, sources say, which will be led by Patrick Durkan of Durkan Residential. Photograph: Dara Mac Dónaill

 

US private equity giant Lone Star has hired stockbroking firm Davy to help with plans for an initial public offering (IPO) of a new Irish housebuilder that could raise more than €300 million.

Sources said Davy will work alongside US investment bank JP Morgan on a Dublin and London stock market flotation of the business, which will be led by Patrick Durkan, managing director of Durkan Residential.

The planned transaction would see Dallas-based Lone Star roll key development sites it has acquired at knock-down prices in Ireland the past six years into the new company.

It is understood that the promoters will also seek to raise at least €300 million of fresh equity in the IPO to fund further asset purchase and the development of the company’s assets.

While Lone Star had originally been targeting a flotation in the fourth quarter of this year, the transaction could run into 2019.

Lone Star’s funds were among the initial wave of overseas investors to buy Irish property assets following the property crash, accumulating some 600 acres of land in Dublin in the process, capable of delivering thousands of homes. The Sunday Times previously reported that Lone Star would likely shift its two prime sites in Co Dublin – in Adamstown, near Lucan, and Portmarnock – into the new company.

A spokesman for Lone Star declined to comment, while efforts to secure comment from Mr Durkan were unsuccessful.

Another flotation

However, market sources said that appetite for another Irish housebuilder flotation – which would be the third since the middle of 2015 – might be tempered by the weak share performance by players in the sector in recent times.

Glenveagh Homes, the homebuilder that was steered on to the stock market last year by Oaktree, another US private equity firm, has seen its share price slump by 14 per cent to €1.06 since the company went about raising an additional €213 million of equity in the market in July.

Oaktree, which had a 16 per cent stake in Glenveagh following its €550 million IPO last October, also moved in July to cash in half its stock.

Meanwhile, shares in Cairn Homes, the first Irish homebuilder to float on the stock exchange in almost two decades when it raised €440 million in an IPO three years’ ago, have fallen from an all-time high of almost €2 each last April to just under €1.50 currently.

Declined further

The market values of both Glenveagh and Cairn have declined further in recent days, even after both have published robust sets of interim results this week.

Elsewhere in the sector, housebuilder Seamus Ross walked away last month from talks to reverse his Alanna Homes into a publicly-quoted Zamano, the former mobile technology group.