Just what the initial public offering market needs: more bad news.
It looks like Dutch financial giant ING has taken a pass on the IPO route for its Canadian real estate portfolio, and now is looking at a sale to a strategic or financial buyer, as reported by The Globe and Mail.
An IPO of the former Summit REIT portfolio that ING acquired before the financial meltdown would have been a signal event in a rough year for IPOs marked by the underperformance of brand name deals. Athasbasca Oil Sands is still trading below its offer price, casting a pall over the IPO market, and Porter Aviation had to pull its sale.
So while there is a lineup of companies ready to go public, there's very little new money looking to get into stocks, especially from institutional investors.
In that environment of doubt and fear, income-producing investments have been one of the few popular asset classes in the new issue market. REITs have appealed to buyers seeking product that spins off cash yield, leading to a lot of offerings by existing real estate trusts.
Now, however, there are signs that even the income market is fraying.
A convertible debt deal by Yellow Pages Income Fund struggled to get out the door recently, and while REITs have been hot, a $1-billion ING real estate IPO would have stretched the depth of the market.