Shares were priced at 230p – at the top end of estimates – valuing the company at £649m. The Times reported yesterday that the IPO was seven times over-subscribed, so it was no surprise that almost as soon as the market had opened, prices jumped to 280p. They’ve been hovering around the 278p mark ever since.
We’ve said it before: it’s vindication for majority shareholder BC Partners, which was widely mocked after it bought the estate agent for £360m in 2007, months before the sky fell in on the UK property industry.
At the time, even it admitted the acquisition was a ‘mistake’. But having almost made its money back on just 60% of the business, we doubt it would say that now…
It’s the latest in a series of residential property IPOs which suggest the market has staged a glorious return: this year alone, housebuilder Crest Nicholson and estate agent Countrywide have both made their own stock market debuts, while property search website Zoopla is expected to float for as much as £1bn in the next few months.
But critics have argued that the flotation of (and subsequent buying frenzy over) London-based Foxtons is another symbol that the housing in the market is spiraling out of control.
With figures like the ones published this week by the Office for National Statistics, which show house prices in London have risen by 9.7% over the past year (in comparison with the rest of England’s 0.8% rise), those concerns are pretty justified.
Despite George Osborne’s attempt this week to deny there’s a bubble (‘let’s not pretend there is a housing boom’, he said on Wednesday, citing mortgage approvals, which are still well down), prices in the capital are only likely to go in one direction.
Some critics, though, point to the fact that all this optimism is because of government intervention (in the form of the much-maligned Help to Buy scheme), which is essentially an artificial ‘crutch’ for the market – not the best way to create long-term, sustainable recovery.
So Foxtons (or BC Partners) was wise to cash in on the burgeoning market while could. It’ll be interesting to see what happens next. If the market continues to grow, that’s one thing. But if things come crashing down around our ears again, Foxtons will earn a reputation as an ‘Indiana Jones’ company: its owners grab their hats just before the economic walls close in…