The price for Metrovacesa’s return to the stock market will be in the range of €18,0/€19,5 per share, implying an initial market capitalisation of between €2.730 billion and €2.957 billion. The share offer, earmarked for qualified investors, involves a placement of 25.8% of the company’s capital. This can be extended to a maximum of 29.7% in the event the under writing banks issue the green shoe. If this happens, Santander will hold on to 50.6% of capital, BBVA 19.7%, the minority shareholders 0.04% and the remaining 29.7% will be free-float.
The offer will close on February 2 and the shares will begin trading on February 5. From that date, minority investors will be able to buy shares. Metrovacesa’s gross asset value (GAV) totals €2.6 billion, while its net asset value (NAV) is €2.7 billion. Of this, 73% corresponds to residential development and 27% for comercial use. The company has 6,1 million square metres of land for developing 37.500 homes, with average deliveries of 4.500 and 5.000 houses per year from 2021.
Bankinter’s analysts recommend that minority investors who can invest after the offer do not buy shares at the IPO price which has been proposed.They explain:
Despite the fact the property cycle is expansive in terms of demand and prices, we believe that the initial valuation is not very attractive for the following reasons. First, a market capitalisation objective in the range of €2.730 billion /€2.957 billion seems very high for a company which is still in an initial growth phase (revenues rose to €18.9 million in the nine months to September, with losses of €33,9 million). Furthermore, it will not meet its target for delivering 4.500 / 5.000 homes annually until 2021.
Also experts at the house research says that the IPO price range means a valuation multiple in the range of 1,0x/1,1x NAV, which a priori seems excessively ambitious.
Neinor Homes trades at a multiple of 1,2x NAV and Aedas made its market debut at a premium of 17% over its NAV. But we need to bear in mind that 13% of the assets in Metrovacesa’s portfolio are not located in big cities or in tourist destinations with bigger demand. Furthermore, 26% of the firm’s land bank is currently not finalist land ready for building on, compared with the 100% finalist land the two afore-mentioned companies have in their portfolio.
