Intu Properties surges on report of private equity interest

Shares of shopping centre owner Intu Properties surged on Monday following a report over the weekend that private equity firm Orion Capital Managers is considering a buyout.

According to The Sunday Times, Orion - which already has a 9.2% stake in Intu - is in the early stages of seeking partners for a buyout of the company, whose rental income fell nearly 18% in the six months to June.

Intu, the owner of the Trafford Centre and Lakeside, said in its half-year results in July that it had taken a hit from a string of company voluntary arrangements as a number of retailers "struggle to remain relevant in a multichannel world". This includes the likes of Debenhams, New Look and House of Fraser.

Peel Hunt said any buyer would need a strategy and the resources to deal with Intu’s £4.9bn of net debt and in particular the significant maturities in 2021-23, which total over £2.5bn.

"Trading at an 85% discount to net asset value and with no dividends being paid at present we believe the shares remain highly speculative," the broker said. It added that any rumoured M&A activity is likely to have a positive read-across to Hammerson, where it continues to see the potential for further asset disposals to help a re-rating in the shares.

At 0915 BST, Intu shares were up 12% at 40.96p.