May 22, 2014 / 11:29 AM / 4 years ago

British property website Zoopla joins rush to stock market

LONDON (Reuters) - Britain’s second-largest property website Zoopla plans to list its shares on the London stock market next month to tap into rising confidence in the country’s housing sector, potentially valuing the group at about 1 billion pounds ($1.7 billion).

Majority owner Daily Mail & General Trust (DMGT) said Zoopla’s existing owners planned to sell shares in June to institutional investors and the estate agents who pay to list properties on its websites.

Zoopla, which was launched in 2008, trails Rightmove in the online property sector, drawing more than 40 million visits a month to its websites and mobile applications, compared with about 80 million visits for its larger rival.

It joins a rush of companies seeking to join the London market and follows recent listings by online groups AO World and Just Eat and property agent Foxtons last year.

Founder and CEO Alex Chesterman told reporters that Zoopla plans to launch additional products and services after the share sale, with a move into the commercial property market penned for this year and possible overseas expansion in the future.

“We have a very strong growth story,” Chesterman said. “We’ve built a leading market proposition in an industry with high barriers to success. Ninety percent of all properties for sale or to rent are advertised on our platform.”

Any listing is likely to be lifted by the strong sentiment around the British housing market, particularly in London, where

prices have surged 17 percent in the 12 months to March, pushed up by cash-rich foreign investors.

The company makes 86 percent of its revenue from the subscription fees paid by estate agents to list their properties, with the rest coming from advertising and the sale of research data.

The move is not without risk, however. Shares in AO World and Just Eat are down by more than 40 percent and 25 percent respectively since they joined the market this year, while other listings have slipped as investors have turned more selective.


Chesterman declined to predict how much the sale would raise, but analysts said the move to have a free float of around 25 percent is likely to value the group at more than 1 billion pounds.

UBS said the listing could value the company at about 1.2 billion pounds ($2 billion), while analysts at Liberum value DMGT’s 52.6 percent stake at 575 million pounds.

By comparison, Rightmove has a market capitalisation of more than 2.3 billion pounds and its share price has risen by 235 percent in the past four years, lifted by the recovering economy and housing market.

Media group DMGT, the publisher of Britain’s Daily Mail and MailOnline, is set to remain Zoopla’s largest shareholder. An overallotment option of up to 15 percent of the total offer will be made available.

Other shareholders include Chesterman and estate agent and property services group Countrywide.

Zoopla reported six-month revenue to March 31 of 38.3 million pounds. Adjusted core earnings were 18.7 million pounds, up from 14.8 million pounds a year earlier, having suffered a full-year loss of 0.6 million pounds as recently as 2011.

DMGT announced the market listing as it posted half-year operating profit up 21 percent on an underlying basis, helped by price rises for its newspaper and tight cost control.

Shares in the group, which said its forecasts remained unchanged for the year, were up 8.9 percent in mid-morning trade, giving it a market value of 3.2 billion pounds.

The group also sold certain small assets including recruitment portal Jobsite. It said the disposals were expected to raise about 150 million pounds, raising hopes of money being returned to shareholders.

Editing by David Goodman

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