Spain’s Merlin Reduces IPO Size as Investor Appetite Drops

Merlin Properties SA, a Spanish real estate investment trust, reduced the size of its initial public offering to 1.25 billion euros ($1.7 billion) from an earlier plan to raise about 1.5 billion euros.

Merlin will sell 125 million shares at 10 euros apiece, the REIT said in a statement today. Merlin, based in Madrid, had received 600 million euros of commitments from investors including Moore Capital Management LLC, it said in a prospectus on June 13.

Other issuers are struggling in the most active year for IPOs in Europe since 2011, data compiled by Bloomberg show. Liberty Living Plc postponed its share sale yesterday citing adverse market conditions and companies such as FinecoBank SpA in Italy have priced sales at the lower end of their original ranges.

“Each time the IPOs are getting bigger and bigger and the market is starting to be saturated,” says Gonzalo Lardies, Spanish equity fund manager at Banco Madrid, who manages 132 million euros of assets. He said 1.5 percent of his fund is invested in Lar Espana Real Estate SOCIMI SA (LRE), another Spanish REIT.

Investment in Spain by funds, private-equity firms and other financial-services companies more than doubled to 13.9 billion euros in 2013, according to Irea, a debt-restructuring firm based in Madrid. Spain last year reduced tax burdens for REIT investors, and Pacific Investment Management Co.’s Bill Gross, Quantum’s George Soros and hedge-fund manager John Paulson have all taken stakes in Spanish REITs in the last several months.

Credit Suisse Group AG (CSGN) is coordinating Merlin’s IPO and is joint book-runner along with UBS AG and Deutsche Bank AG. Freshfields Bruckhaus Deringer LLP is legal adviser.

To contact the reporters on this story: Ruth David in London at rdavid9@bloomberg.net; Macarena Munoz in Madrid at mmunoz39@bloomberg.net

To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net Jeffrey St.Onge

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