Failure of Chris Mills’ Harwood Capital to convince institutional investors to back high-yielding real estate investment trust underlines challenging conditions facing investment company launches.
Plans by Chris Mills’ Harwood Capital to launch a high-yielding, rental property trust have foundered after institutional investors decided not to back the initial public share offer (IPO).
The Multifamily Housing real estate investment trust announced in September it was looking to raise up to £175 million to invest in a portfolio of affordable, rental properties in the regions.
It later extended its fund-raising deadline to continue talks with several potential cornerstone investors about taking big positions in the listed fund, which aimed to provide a 5% dividend yield.
However, these discussions have proved inconclusive and with no certainty of success the company has cancelled the IPO and will return money to those investors who had subscribed.
‘Despite the positive interest shown by a wide number of long-term institutional shareholders, the board has determined to postpone the issue pending culmination of these discussions,’ the company stated.
The setback for Harwood Capital, a boutique founded by smaller companies manager Mills, is another example of the tough conditions for investment company launches.
While Terry Smith’s Smithson (SSON) wowed the market with its record £825 million fund raise last month, this has been the exception rather than the rule with other IPOs such as Mobius (MMIT) and Merian Chrysalis (MERI) which struggled to raise £100 million amid volatile stock markets.
This is the second IPO to be withdrawn after Blue Ocean Maritime Income last month abandoned an attempt to raise £190 million to lend to private shipping companies.
However, Gresham House Energy Storage Fund (GRID) is expected to announce tomorrow that it has raised sufficient funds to proceed with its stock market listing.