LONE STAR DELAYS HOUSEBUILDER IPO AFTER SLUMP - US private equity giant Lone Star's plans for the €300 million-plus initial public offering (IPO) of an Irish housebuilding firm have been put on hold until next year, following a "red October" sell-off of equities globally last month, according to market sources.
The company, called DRes, set up in partnership with Durkan Residential's managing director, Patrick Durkan, is said to have received positive feedback from potential investors on its plans as new home supply falls well short of demand in Ireland. However, a rally by stocks globally in the past eight sessions has not provided a favourable enough backdrop to launch a transaction, especially as shares in DRes's nearest peers, Cairn Homes and Glenveagh Properties, are currently languishing between 24% and 27% below where they started 2018 on the Dublin market. A spokesman for DRes declined to comment. DRes is the latest of a string of Irish IPO hopefuls to have put plans on ice recently. The Irish Times reported last month that US private equity group Oaktree and Dublin-based Sigma Retail Partners has delayed until next year a decision on whether to proceed with Ireland's first retail real-estate investment IPO. Press-Up, the pub, restaurant and hotel group led by Paddy McKillen junior, decided last month to mothball plans for a stock market flotation, while the Sunday Times reported over the weekend that property investment and hospitality group Tetrarch has shelved plans for a 2018 flotation due to market volatility.
HALF OF BAD LOANS NOW RESIDENTIAL MORTGAGES - Irish banks must shed a further €9 billion of bad loans to meet ECB targets, Moody's has warned.
Unlike the early period after the crash, when sales of commercial real estate and developer loans dominated the great bank sell-offs, further disposals will be dominated by home loans, the rating agency said. "This is because legacy mortgage arrears, which take a long time to resolve internally in Ireland due to legal constraints on home repossessions, now account for most of their remaining non-performing loans (NPLs)." The report by Moody's Investors Service said Irish banks' high stock of problem loans is still a burden, despite action since 2013 to reduce the scale of the issue. And it confirms that the target to cut bad loans to the European average is becoming harder to hit, as the average elsewhere declines, writes the Irish Independent. "The largest Irish lenders will need to shed about €9 billion of problematic exposures to bring their ratios of NPLs to gross loans into line with the European average, which has now fallen below 4%," said Roland Auquier, a Moody's assistant vice president At the start of this year the main banks here came under pressure from Europe's Single Supervisory Mechanism (SSM), a regulator, to cut their bad loans to around 5% of all lending, the then average. That prompted major loan sales this year including by AIB, Ulster Bank and Permanent TSB, and has triggered Bank of Ireland and KBC to rethink their previous and long-held policies of working through customer loans rather than selling.
DRUG FIRM MALIN SCRAPS PLANS FOR DUAL LONDON LISTING - State-backed drug development investment firm Malin has scrapped plans to seek a secondary stock market listing in London.
Updating analysts on its strategy, during a capital markets day in London yesterday, Malin's management team - led by executive chairman Ian Curley and chief financial officer Darragh Lyons - said it expects to realise significant investment returns on its four main investee firms, two of which are closing in on full commercialisation status, within the next two years. They said that an element of that investment profit will be returned to shareholders and the rest will be used for new investments, says the Irish Examiner. Malin is keen to invest in further drug development firms in the oncology and genetic disease treatment areas. The company currently has investments in 18 drug research firms and it will continue to invest - on a lower level - in its 14 less-developed interests. Malin is partly owned by the Ireland Strategic Investment Fund and UK-based fund manager Woodford Investment Managers, with less than 40% of its shares held by retail investors. Malin significantly overhauled its board during the summer and former chief executive Adrian Howd left last month.
KPMG ACTS ON 'CONFLICTS OF INTEREST' WITH FIRST CURB ON CONSULTING WORK - KPMG has become the first of the Big Four accounting firms to publicly pledge to stop offering consulting services to large audit clients in an attempt to repair its image following a series of high-profile accounting scandals.
Bill Michael, KPMG chairman, said in a memo sent to partners on Thursday that the firm would phase out all services deemed non-essential for large listed audit clients to "remove even the perception of a possible conflict [of interest]". This includes work such as restructuring, M&A and IT advice. The move comes amid growing calls for the Big Four, which dominate the UK's £12.6 billion accounting market, to be broken up to shore up confidence in the scandal-ridden sector, writes the Financial Times. The Financial Reporting Council, Britain's accounting watchdog, this year singled out KPMG for criticism by saying the quality of its audit work had deteriorated to an "unacceptable level". KPMG's audit team has been involved in major scandals, including its work for the controversial Gupta family in South Africa, its audit of collapsed government outsourcer Carillion and its work for insurance technology group Quindell, for which it was fined for misconduct. KPMG declined to comment on the memo, which has been seen by the Financial Times and was first reported by Sky News. The firm earned £198m in audit fees from FTSE 350 clients last year, and an additional £79m from providing consulting services to those clients.