Zoopla shares rose more than 4 per cent on their debut after the property website bowed to market pressure and priced its flotation lower than had been anticipated.
The company was valued at £919m as it joined the London Stock Exchange at 220p a share, in the lower half of its original 200p-250p range. However, the decision was welcomed by the City as the shares climbed to 230p, unlike those of other recent listings, such as Saga, which have flopped on debut.
The valuation puts Zoopla in line for a place in the FTSE 250. New shares were not issued in the flotation, but the selling shareholders raised about £370m from the listing. These include the website’s majority shareholder DMGT, owner of the Daily Mail, which sold 35 per cent of its stake, netting it £169m.
The estate agent Countrywide said it had sold a 2.2 per cent stake worth £19.9m but will continue to hold a 4.1 per cent stake. About a fifth of the 19,000 estate agents that list their properties on Zoopla took up its offer of a 20 per cent discount on the shares.
“This looks a decent result for DMGT in our view, given a more soggy initial public offering market,” Steve Liechti, an analyst at Investec, said. “This is not great for the bulls in our view but better than our low-end forecast,” he added.
Zoopla, which is the UK’s second largest property website, has quickly become a “must visit” site for home buyers or sellers since launching in 2008. The site carries sale prices and value estimates for every single address in the UK.
Its prospects also look good, with traffic on Zoopla’s website and mobile apps up 37 per cent in the eight months to May against a year earlier as the UK property market booms. More than half of its traffic is now on mobile.
Zoopla’s founder Alex Chesterman, who also founded the video rental company Lovefilm in 2007, will remain its chief executive. He reduced his stake in the company from about 8 per cent to 6.1 per cent in the listing, pocketing £33m.
Mr Chesterman said: “[The listing] marks an important milestone for our business following a number of years of strong growth and having built a market-leading proposition.
“We have received a significant level of institutional investor support in our business and also received strong support from our members who have also participated in our initial public offering.
“We are looking forward to life as a public company and to welcoming our new shareholders to the business.”
The IPO market has been at its busiest since 2007 in recent months with shares in Royal Mail and Foxtons rocketing on their debuts last autumn. But some investors are fretting it may have peaked and other listings have not fared so well.