Foxtons to shake-off debt with £55m float

The estate agent has announced its plans to float next month valuing it at between £400m and £500m

by Gabriella Griffith
Last Updated: 09 Sep 2013

London’s red-hot property market is certainly giving Foxtons a boost as it announces a £55m floatation for September. The estate agent, which was bailed out by its lenders three years ago, has said the proceeds from the sale of shares will be used to repay its outstanding debt and 50% of the shares will be in free float.

The price of the shares is still under wraps but the company is expected to be valued at between £400m and £500m. MT remembers the good old days when companies used to float in order to grow, rather then pay off their debts.

Foxtons, which has 42 branches across London and the southeast, has said the offer would be made up of the sale of new shares and a partial sale of shares owned by BC Partners, the estate agents majority stakeholder.

The listing on the London Stock Exchange is likely to land its senior management team, including chief executive Michael Brown - who own an estimated 20% of the business, around £100m. It’s not the first time Foxtons’ upper echelons have pocketed a pretty penny from the company, back in 2007 its founder Jon Hunt banked some £370m following its sale to BC Partners – just on time for the property market to collapse.

Those living in the southeast that don’t yet have the pleasure of living close to one of Foxtons swanky agencies, could be about to welcome its famous fleet of branded minis. The company has announced plans for expansion; it has a target of opening some five to ten branches per year between 2014 and 2018, having pinpointed 60 ‘local markets’ in London, which are ripe and ready for the Foxtons treatment.

The expansion of the agency, which typically sells homes for between £200,000 and £1.4m, is an indication of London’s soaring luxury property market.

A report from the Centre of Economics and Business Research has found the demand for luxury homes in the capital has gone through the roof. Last years’ sales volume of homes worth £2m or more was 14.5% higher than during the peak, in 2007.

Let’s just hope Foxtons doesn’t end up adding more bouncers to its payroll. Earlier this year the estate agent had to employ private security guards to protect its newly opened Brixton branch, following angry protests from residents, saying they were being priced out of the area. A word of warning, the cost of removing ‘yuppies out’ graffiti from its venues may well start to escalate.

Image: Izzy Koksal
Things may be looking pretty rosy for Foxtons but not all estate agents have been so quick to recover from the financial crash. According to the latest research, insolvencies among estate agencies across the country have risen 57%, in the year to the end of June. Some smaller estate agencies have also been struggling against the onslaught of websites such as Zoopla and Rightmove, which are luring buyers away from high street branches.

Presumably, the offering of free fizzy drinks and more brightly coloured scoop-chairs than you could shake an Ikea cushion at have helped to make Foxtons a worthwhile trip away from the desktop.

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