IMMOFINANZ: What we did in an accelerated bookbuilding process
Last week we took a further step to reduce our investment in BUWOG and placed 10 million shares in an accelerated bookbuilding process. We have since received a number of questions from private investors and now want to summarise the most important points.The further reduction of our BUWOG investment reflects our previously communicated strategy. At the time of the spin-off, we announced our intention to sell this investment over the medium-term because IMMOFINANZ is now positioned as a pure commercial real estate player. This strategy was also welcomed by analysts and investors.
We took the first step in autumn last year by placing roughly 10.5 million shares with investors, and thereby increased BUWOG’s free float to approx. 60%. Now we have taken a further step and relied on a consortium with three of the largest investment banks. The advantages of this type of accelerated bookbuilding process is that the shares can be placed quickly (normally within a few hours overnight) and all at the same time. That is important because a longer placement phase would have a substantial negative influence on the share price – on the one hand, because of the share overhang and, on the other hand, because of short coverage by various market participants.
These types of accelerated bookbuilding processes are frequently used on the international capital market. These placements are also normally made at a discount to the market price – although an attempt is made to keep the discount as low as possible. The general market climate always plays a role here – and the market climate is currently much more volatile than in autumn 2015. The share price usually recovers very quickly from these discounts – as was the case with BUWOG last autumn.
The order book was high-quality with numerous long-term investors and real estate specialists.
The further reduction in our BUWOG investment will have a positive effect on both IMMOFINANZ and BUWOG.
The higher free float component strengthens BUWOG capital market profile (a higher free float component generally has a positive effect on the liquidity and attractiveness of a stock). This, in turn, benefits IMMOFINANZ because we still hold roughly 28.5 million shares. We also made a book profit on the placement of the 10 million BUWOG shares. The sale proceeds will be used to reduce Group liabilities and, in this way, will lower Group financing costs.