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Business News

Flotation windfall for bosses at Foxtons

IPO could see them share up to £100m as property market remains buoyant

The London estate agency Foxtons will this week reinforce rising investor confidence in the UK property market by unveiling a flotation valued at up to £500m.

Bosses at Foxtons, best-known for its fleet of Mini Coopers, could share a windfall of up to £100m from the proposed initial public offering (IPO) on the London Stock Exchange.

The expected announcement on Tuesday will mark an astonishing turnaround for BC Partners, the estate agency’s private equity owner, which saw the value of Foxtons plummet during the credit crisis.

The likely flotation will also reinforce the current buoyancy of the London housing market, particularly in well-heeled areas where Foxtons brightly coloured offices are located.

The Government’s Help to Buy scheme has also helped to spread the feel-good factor outside the capital, with UK house prices rising by 4.6 per cent over the three months to July, according to the closely-followed Halifax index. Management at Foxtons, whose chief executive is Michael Brown, reportedly own 20 per cent of the agency’s equity, which will see them each make a small fortune if the flotation gets the green light.

Foxtons posted record underlying earnings of £37.9m over the year to December, on sales up by 2.8 per cent to £117.7m.

BC Partners bought Foxtons in May 2007 – at the peak of the property market – in a deal worth £360m. But the transaction saw Foxtons loaded up with £260m of debt, which proved to be unsustainable after the housing market crashed and the agency plunged to a loss.

Its parlous finances saw Bank of America and Mizuho take control of Foxtons, which is known for its aggressive sales tactics. Crucially, BC Partners kept a stake by injecting £50m into the business and the private equity firm bought back Foxtons last year, following its improved performance.

The proposed float comes as figures from Knight Frank, the London estate agent, reveals that prices for premium property in well-heeled parts of central London continue to surge. Marylebone and Notting Hill posted price rises of 1.5 per cent and 1 per cent, respectively, while Islington was up by 0.9 per cent.

This week’s move by Foxtons follows the £750m flotation of rival Countrywide, which owns the Bairstow Eves and Hamptons estate agencies, in March. Among the other firms that have listed on the London Stock Exchange this year are the car insurance firm Esure, Conviviality Retail, the company behind the Bargain Booze chain, and the life insurer Partnership Assurance.

The sale of Foxtons in 2007 helped its founder Jon Hunt, to amass a £925m fortune, according to the Sunday Times Rich List.

Outside of London, the Coalition’s Help-to-Buy scheme has given the housing market a shot in the arm since it was introduced by the Chancellor, George Osborne, in March. In the initial phase, the scheme offers interest-free loans for five years for people buying a new home with a value of up to £600,000. In the second stage, which starts in January, the Government will underwrite £130bn worth of mortgages, in a bid to encourage banks to keep lending.

BC Partners also owns Phones4U, the retailer of mobile phones.