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Germany's Instone Real Estate prices share placement at bottom of range  |  February 14, 2018

Reuters Staff Frankfurt

Shares in German residential property developer Instone Real Estate Group BV were priced at 21.50 euros apiece on Tuesday, at the bottom of an indicative price range of 21.50 to 25.50 euros for its initial share offering as market turbulence spooked investors.


Instone’s shares were due to start trading in Frankfurt on Thursday after the second market listing in Germany this year. Drugmaker Dermapharm made a lacklustre debut last week.


Other flotations expected in the coming months include Siemens AG’s Healthineers business, which sources have said is likely to come in March in what may be Germany’s biggest IPO this year. Brake systems maker Knorr-Bremse and Deutsche Bank AG’s asset management arm DWS are seen hot on its heels.


World stock markets reached all-time highs last month, with the combination of solid global growth and low inflation powering the appetite for risk. But they have nose-dived recently amid concerns about a bond market sell-off and rising inflation.


The Instone offering to institutional investors comprised 7 million new shares from a capital increase and 12.9 million shares from fund holdings by ActivumSG Capital Management.


The placement of 19.9 million shares raised about 428 million euros and gives the company a market capitalisation of approximately 795 million euros at the beginning of trading, Instone said on Tuesday. Fifty-four percent of shares in Instone will be freely traded following the listing, assuming full exercise of a greenshoe option.


Instone was formed by a merger of peer GRK and Formart, part of German builder Hochtief, which specialist real estate investor Activum bought in 2014 for about 300 million euros.


The group said it plans to use around 55 million euros of the 142 million in net proceeds from the placement of new shares to repay a shareholder loan and the remainder will go toward the acquisition and development of new residential projects.


Deutsche Bank and Credit Suisse are organising the flotation of Instone with the help of Morgan Stanley, BNP Paribas and Unicredit. (Reporting by Maria Sheahan Additional reporting by Tom Sims Editing by Tom Brown)