By Daisy Ku

LONDON (Reuters) - Property company Landbank has ditched a 250 million pound initial public offering in favour of a private placement instead, a source familiar with the matter told Reuters.

The newly-formed company, which aims to acquire land for residential development, planned a market debut on Wednesday on the junior board of the London Stock Exchange (LSE.L: Quote, Profile, Research).

The company decided last week it would prefer a private placement to raise 150 million to 250 million pounds.

"The company still hopes to raise a similar amount through a private deal, the process is still going on," the source said.

Landbank's move came after NewRiver Retail, another new UK property firm, last month shelved a plan for a 250 million pound listing on London's Alternative Investment Market to have been arranged by Merrill Lynch (BAC.N: Quote, Profile, Research).

The benchmark FTSE 100 index .FTSE has fallen 3.4 percent since the start of July amid turbulent real estate and equity market conditions.

(Editing by Douwe Miedema and David Cowell)