Bottom Line: Another land grab

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The Independent Online
THE flotation of chartered surveyor Chesterton, priced yesterday at 100p a share, puts a value of pounds 51.5m on the company, making it the largest quoted property agent.

Unusually for a recent float, the size of the issue marginally beat original expectations of about pounds 50m.

Getting away on a 4.13 per cent yield, lower than the market as a whole, reflects hopes for growth as the property market picks up, a measure of confidence in Chesterton's strong UK network and the security of income provided by a bias towards advisory rather than agency work.

Less convincing are Chesterton's reasons for coming to the market.

A higher profile, the means to make paper acquisitions and staff motivation look like convenient glosses for an exercise that is really a means by which recently retired partners can cash in their chips. Of the pounds 20.6m being raised only pounds 4m is for the company.

It would perhaps be unfair to draw too many parallels with the share-price performance of other quoted agents that joined the market in a rush of misplaced enthusiasm in the late 1980s. But the fact that Savills, Herring Baker, Fletcher King, DTZ, De Morgan and Conrad Ritblat are all trading below their flotation price does not augur well.