JLL has pulled its £50m flotation of joint venture property development company DevCap after failing to raise sufficient money from the public markets.
The company is understood to be now looking to the private investor market to launch the project. Shares had been due to start trading on AIM this week.
JLL corporate finance director Tony Edgley said the venture had received a “very significant” equity participation interest, but not from the public market.
“It appeared to us that we would be able to get much more financial firepower by placing DevCap as a private entity than a public entity,” he said. “Because we have had huge success in the past three years in syndicating to private investors, we made the decision at that point to go down the private route rather than the public route.”
Edgley said the company had also been conscious that it was competing with infrastructure funds and other public offerings in the market. “Therefore, the risk of not raising sufficient capital was simply not worth taking while we had an oversubscription in the private investor market,” he said.
Edgley said the company had managed to raise £30m from private investors and that some investors who had expressed interest in the public offer would follow into the private placement. It is expected DevCap will close as a private vehicle within the next two to four weeks.
The broker, Bridgewell, which acted as DevCap’s nominated adviser, said investors could have been wary of the fact the company would not pay dividends before March 2009.
“There was also a feeling the property market was relatively high and many people have been selling out of property funds and investing in infrastructure funds,” said Bridgewell head of sales Michael Cuthbert.
DevCap was established to undertake joint ventures with development partners, focusing on commercial development in the office, industrial, retail and mixed-use and residential sectors. As a public company, it was targeting a 5% dividend within two years, and planned to target £10m-£30m developments, which it would then sell to optimise returns.
