Jitters appear as Brandeaux pulls £400m Liberty Living IPO

Posted by Tom Walker in

In the continuing Brandeaux fund saga, which has seen the fund manager grapple with various strategies to provide liquidity for its existing shareholders, the fund manager confirmed last week that it has pulled out of the £400m Student Accommodation fund initial public offering (IPO) it was planning.

The IPO of the suspended British Virgin Islands Student Accommodation Fund, which includes the Liberty Living student accommodation brand, was intended to repay shareholders in the open-ended vehicle; however the plans were withdrawn following what Brandeaux executives cited as "adverse public market conditions". This U-turn follows recent news of a number of under-performing IPOs including easyHotel (the sister brand of the easyJet budget airline), which only achieved half its initial fund raising target. Additionally, a number of other high profile companies have been forced to abandon their scheduled IPOs, including Wizz Air, an Eastern European budget airline, and FatFace, the high street clothing brand.

Whilst some discern these failings as signs that appetite for the broader IPO market has past its peak, others within the student property market attribute Brandeaux's decision to fears of an oversupply in the booming student accommodation sector. However, contrary to any concerns of a glut of bed spaces, London Cornwall Property Partners (LCPP) successfully raised £85m from its recent IPO of Empiric Student Property, a competitor of Brandeaux's Liberty Living brand. LCPP's new real estate investment trust, Empiric Properties, will target wealthy postgraduates, international students and university students based in major towns.

Clearly jitters in the market are starting to surface as investors continue to plough into the booming student property phenomenon. Whilst there may be space for a greater capacity of student bed spaces, the challenge is ensuring that resources continue to be allocated efficiently and that investment doesn't resort to the blind pursuit of precious returns. How long this unabated investment continues before someone gets burnt remains to be the million dollar question.

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