Stock market turmoil today claimed the scalp of one of Europe’s biggest IPOs in recent years, dashing hopes of a €1 billion (£850 million) comeback from private equity mogul Guy Hands.
Deutsche Annington, Germany’s largest residential landlord, had been due to list in Frankfurt today but the launch — which would have valued the company at 11 billion including debt — was pulled at the eleventh hour by Hands’ Terra Firma vehicle due to “persistent adverse market conditions”.
Terra Firma had been hoping to use part of the €1 billion expected to be raised from the Deutsche Annington listing to return money to investors ahead of launching a new fund.
The decision also comes after a month of mayhem in global markets, triggered by Federal Reserve chairman Ben Bernanke’s signals that the US central bank is ready to slow the pace of its stimulus programme for the world’s biggest economy.
The FTSE 100 sank 1.6% today as investors also fretted over the renewed spectre of eurozone turmoil. Germany’s Dax index has lost 8% since May.
Bailed-out Portugal has seen two Cabinet ministers resign over harsh budget cuts this week, while Greece is being given a three-day ultimatum to spell out how it will deliver austerity measures or face an end to aid payments.
Markets were also shaken by weak data from China and continued political chaos in Egypt, which is pushing up the cost of oil. IG analyst David Madden said: “It looks as if we could be headed for another summertime crisis in the eurozone, as Portugal’s government crumbles and bond yields spike. Combine this with a political crisis in Egypt and yet more bad news from China and you have the recipe for a very choppy day on the markets.”
Hands’ move to pull the float comes as a huge setback for the Guernsey-based financier, who is struggling to rebuild his reputation after a disastrous £4 billion takeover of the music retailer EMI in 2007.
Experts will now be watching closely to see whether Hands is able to offload wind farm operator Infinis and Irish gas company Phoenix over the coming months. He has also appointed bankers to look at selling or floating Odeon, the cinema group.
One former Terra Firma investor said today: “The markets are sketchy at the moment and it’s no surprise to see this being pulled. The only exit route at the moment seems to be the IPO market and even that’s a gamble at the moment.
“In terms of Hands, there’s no doubt this would have helped his cause but he has a loyal band of Asian followers so it’s hard to write him off. I doubt many of the other investors burnt by EMI will be back to support him though.”