Earlier today, Toronto-based Tricon Capital Group announced that its wholly-owned subsidiary, Tricon Investment Partners, will not be proceeding with its initial public offering (IPO).
Tricon Investment Partners was intended to be a dedicated vehicle for Tricon’s land and home building investment business in the United States.
“We heard from some of our shareholders that the pure play exposure was being diluted at Tricon as we go into other businesses, like single-family rental and multifamily, and some wanted a pure play,” says Gary Berman, president and CEO of Tricon. “It [the IPO] was an idea strongly supported by our underwriters and some of our key investors but was done in a poor market timing.”
The rocky market, which has seen home builder stocks plummet this week, killed those hopes.
“We basically hit a wall in the fundraising process,” Berman says. “The markets have been absolutely brutal in the last week. And I think in an environment where certain key names are down 20% or 50%, portfolio managers just can’t focus on a new name. They just can’t do it. Unfortunately, we just had terrible timing.”
For the time being, Berman says Tricon will continue to invest in land and home building opportunities through direct investment at the parent company level and/or through its private investment vehicles. But he didn’t close the door to another IPO.
“To me, it’s just a bump in the road,” Berman said. “We either go forward and find a better time to take this to market or we just revert back to Plan A, which is to continue to fund this stuff through Tricon.”
And in the press release announcing the decision to end the IPO, Berman reiterated his interest in the U.S. In fact, the company recently announced Tricon Luxury Residences, which would invest in U.S. multifamily, and it continues to look for joint venture deals with home builders.
“Tricon remains optimistic about the United States housing recovery and the availability of attractive risk-adjusted returns therefrom… The fundamentals for U.S. housing are the best they have been in nearly a decade and so we remain excited about our investment opportunities and growth prospects going forward,” Berman said in the press release.