Countrywide Holdings, Britain’s largest estate agent by revenue, plans to return to the stock market after nearly six years in private hands, hoping a fragile housing market recovery will be enough to tempt investors amid growing demand for new issues.
Grenville Turner commented that the reasons for launching the IPO go back to the reasons they took the company private in 2006. The strategic initiatives included growing their lettings representation (lettings profit has increased 140%), restructuring the cost base of the business (reduced by over £200 mil), strengthening their representation in London and the South East (Acquisitions of Hamptons and Sotheby’s) and making a series of 40 acquisitions to grow the business.
The ITF announcement document lists the following business highlights:
- Number one estate agency in the UK by revenues and transaction volumes
- Market leading positions across its core businesses
- Business transformed following a proactive period of investment in future growth by an experienced management team while in private ownership
- A scalable, diversified and robust business with significant recurring revenue streams offering a risk-mitigated position in the UK residential property market
- Track record of investing in growth and creation of value in the current market and the building of a scalable platform for future growth
(You can download the ITF announcement document here)
The company, bought for 1.1 billion pounds by a U.S. private equity firm in May 2007, said on Wednesday it planned to raise 200 million pounds by selling new shares. Countrywide declined to say what it might be worth after floating, but expected to be included in the London Stock Exchange’s FTSE-250 index of mid-cap companies. The company reported earnings before interest, tax, depreciation and amortisation, excluding one off items, of 63 million pounds for 2012, on revenues that rose six percent to 540 million pounds.
“Sentiment is much stronger than it was five years ago and the availability of affordable mortgages is coming back,” Turner said on a conference call with journalists.
House price data is mixed in Britain but there is tentative evidence to suggest prices are steadying as government measures kick in to encourage banks to lend more. The average house price in Britain fell from a peak of 199,612 pounds in August 2007 to 154,663 pounds in April 2009 before climbing to 162,932 in January this year, according to mortgage provider Halifax, part of Lloyds Banking Group .
In an interview with Annabel Dixon from estates gazette, Turner said the money raise will be used to pay down existing debt and move the remaining debt from interest levels of 10% down to 3%, a move that will cut its annual interest bill from 25 million pounds to less than 3 million pounds. Beyond that they can then continue to use cash generated from profits in to further acquisitions and use it to expand and improve the business.