Zoopla confirms IPO plans: what's taken it so long?

IPO WATCH: The property website has been the subject of flotation rumours since before Christmas, but it's only just confirmed its plans (as FatFace pulled out)

by Emma Haslett
Last Updated: 22 May 2014

Zoopla is one of those websites that, like Facebook, knocked its competitors into a cocked hat: founded in 2007, it is now the second most visited property search site in the UK, having acquired PrimeLocation, SmartNewHomes and HomesOverseas last year.

Now it’s announced plans to float: the group said today it wants to float ‘at least’ 25% of its shares. Word on the (residential) street is that it could end up being valued at about £1bn. The sale won’t raise any cash for the actual company, though: all the shares being sold will come from stakes owned by Daily Mail General Trust, mega estate agent Countrywide and founder/chief exec Alex Chesterman.

Rumours of Zoopla’s impending listing have been doing the rounds since before Christmas, but went a bit quiet over the past couple of months. Which, considering the inexorable rise of the residential property market, might seem strange: but presumably Zoopla thought twice after the IPOs of other members of the UK’s tech brethren – notably King and Just Eat – went less than smoothly.

Zoopla, though, is slightly different, mainly thanks to its position straddling the tech and property markets. Although tech IPOs may have been weak lately, recent property flotations have been wildly successful: not least that of its parent company, mega-estate agent Countrywide, whose share price increased by 50% in the six months after its market debut last March.

Shares in rival estate agent Foxtons have also rocketed since its debut: having started at 230p, they’re now just under 300p. Moreover, the property website's owners probably want to cash in before the Bank of England steps in to cool down the housing market.

So Zoopla’s success depends on how investors see it. As a tech company, it’s a market leader, with a reported 40 million unique users a month and 90% of the UK’s properties for sale listed on it. As a property company, it's one of the top two in its market. But investors have had their fingers burned one too many times by tech companies.

By contrast, recent retail flotations have been less than encouraging: Poundland shares, for instance, are still more than 15% below their offer price. So it’s hardly surprising that fashion retailer FatFace has taken a long, hard look at the market and decided it’s not for them. In a statement this morning, the company said it had decided to ‘discontinue its plans’, mainly because of ‘current equity market conditions’. A wise move. 

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