Lockhart’s hopes dashed for NewRiver launch

Plans to raise £250m for a new retail property company have been shelved after it failed to find investor support for even the minimum amount required to float.

NewRiver Retail, which was to be veteran property entrepreneur David Lockhart’s return to the listed sector, announced earlier this month that it would aim to raise £250m to look for bargains in the retail property market.

However, it failed to find the necessary investor appetite to reach its minimum requirement of £100m when fundraising closed on Wednesday evening and the launch was pulled Thursday morning. There are thought to be plans to review the situation again in the autumn, although the company would not comment on the situation beyond saying that it was “reviewing options”.

NewRiver was one of a number of Aim flotations looking at raising money to capitalise on the low prices on offer in the real estate market, which has suffered its worst slump on record over the past two years. It would have been the biggest initial public offering in London so far this year.

There have also been a number of equity raisings by established companies hoping to buy cheap assets, with about £300m raised this week alone by Hansteen and Development Securities to expand their businesses.

Mr Lockhart had previously set up Halladale, before floating in 2001 and selling for £171m in May 2007, but even this record failed to secure the necessary shareholder backing.

Merrill Lynch was advising NewRiver. The board of NewRiver was to have been chaired by Paul Roy, former Merrill Lynch banker and chairman of the British Horseracing Authority.

Investors are reporting that there are signs of indigestion for new issues and further capital raising this side of summer, despite the success of the Max Property IPO last month.

Patrick Sumner, head of property equities at Henderson Global Investors, said of the recent new issues: “We are virtually full up. There is only so much we can have in new firms outside the benchmark indices that will take a year or two to fully invest.

“They are more akin to private equity in the first instance, whatever their medium term potential.”

NewRiver also may have suffered by its focus on the retail sector of the property market, which is expected to be one of the worst hit areas given the problems among retailers. Analysts said Thursday that it was not the best time to launch a blind investment fund into a market still showing significant falls in value.