Shares in ItalyÂ's Pirelli & C. Real Estate fell 10 percent on their debut on Tuesday on concern that the shares -- and the countryÂ's property market -- were overpriced.
The IPOÂ's reception was also a sign of weak appetite for new stock that could hit other upcoming big-name IPOs, most visibly Italian luxury goods firm Prada which is due to list next month.
The property arm of Pirelli & C. PECI.MI closed down 9.7 percent at 23.47 euros. Its IPO price of 26 euros had already been set at the bottom of an initial 26-31.5 euro range.
Including a greenshoe tranche, 40 percent of Pirelli REÂ's capital was floated in the IPO to raise about 430 million euros.
'The Italian real estate market is very expensive,' said Nicolo Nunziata, a fund manager at Banca Profilo. 'If it falls, it will hit the net asset value of Pirelli Real Estate.'
'The 26 euro price gave it very high multiplies compared with international competitors,' said Andrea Pasetti, a fund manager for Capitalgest in Brescia. 'Also, the market as a whole isnÂ't helping, even if it is up today.'
Pirelli RE is one of a few companies that have braved bearish European markets to float their shares this year.
In the end, management decided to re-invest 90 percent of their post-tax gains from the sale option in Pirelll RE stock.
Pirelli RE has said it would use 105 million euros from a capital increase carried out with the IPO to invest in more property and look into developing a franchised sales network. Less clear is what Pirelli & C. will do with its portion of the offering, worth 263 million euros.
It might buy more shares in cables and tyres group Pirelli, Pirelli Chief Executive Marco Tronchetti Provera has said, simplifying the Â'Chinese boxÂ' structure via which the Pirelli group effectively controls Telecom Italia.