Cushman & Wakefield fetched $765m in an initial public offering late on Wednesday, making the commercial real estate company worth about $3bn.
Founded in New York more than a century ago, it merged with TPG-owned DTZ in 2015. The transaction leaves the company with $2.6bn in debt after the listing.
The company sold 45m shares at $17, the midpoint of its range of $16-$18.
For the six months ended June 30, 2018, Cushman predicted revenues of $3.7bn up 18 per cent from the same period a year ago. Fee revenue was expected to be 10 per cent higher at $2.7bn. The company put the net loss in the period at $124m, narrowing from $167m.
Citing industry research in regulatory documents, Cushman said the global commercial real estate industry is expected to grow at 5 per cent annually to more than $4tn in 2022, outpacing expected global gross domestic product growth. Concerns come if the economic expansion begins to falter as real estate is a cyclical business.
Matthew Kennedy, an IPO market strategist at Renaissance Capital, which runs exchange traded funds that buy newly listed shares, said Cushman’s debt is also a worry, so much so that it is listed in offering documents as a risk factor.
On a trailing 12-month basis, earnings before interest, taxes, depreciation and amortisation comes to $574m, putting the net debt to Ebitda ratio at 3.3 times.
Servicing that debt will eat into cash flow for the foreseeable future, Mr Kennedy said.*
*This article has been updated to clarify the analyst’s comment