Agents’ Mutual is officially making no comment on the timetable for the company flotation but speculation within the industry is mounting that first moves will be announced shortly.
The company is to float on the Alternative Investment Market, a part of the London Stock Exchange set up to encourage start-ups and smaller enterprises - as such, floating a company on it is a quicker and less complicated process than listing on the full market. Once floated, companies enjoy much greater self-regulation than those listed elsewhere.
Most AIM floats happen between three and six months after securing official sanction - in Agents’ Mutual’s case, that was September 6 - and a desire to float ahead of, or just after, the New Year break may have been the reason behind the company’s flurry of activity over the summer, when it engaged member agents in a series of local meetings.
Key to the success of the float is the work undertaken by the Nominated Advisor, or Nomad, which in this case is Zeus Capital - the same firm which advised Purplebricks on its float, which occured in mid-December 2015.
Zeus may well have undertaken some of the work required for the Agents' Mutual float, such as the preparation of a prospectus and consideration of a potential share price, during the summer in anticipation of a successful Yes vote to Agents’ Mutual’s demutualisation.
Portal marketing is also very strong around Christmas: both Rightmove and ZPG have for some years had major TV and advertising campaigns to take advantage of families having time to plan for the year ahead.
Much emphasis is made of portal visits on Christmas Day, Boxing Day and around the New Year holiday, and many industry observers believe OnTheMarket may spend significant sums to join in that tradition - that would suggest a possible float date ahead of the Christmas holiday season.
Speculation over an imminent move has been fuelled by what some agents regard as pressure being applied by Agents’ Mutual reps for existing members to sign up to longer listing periods and to agree to a five year share ‘lock-in’ - which we reported on yesterday - to give a sign to the stock market and potential investors that the company is succeeding.
Agents’ Mutual also wants to go to the stock market showing an increase from the 2,700 estate and letting agency firms and their 5,700 branches previously listed on its portal, OnTheMarket.
When its parent company floats, OnTheMarket will drop its only-one-other-portal rule and will allow online estate agencies to list for the first time - reversing two key symbols of the company’s previous mutual status and backing for traditional estate agencies.
OnTheMarket member agents will receive ordinary shares; precisely how many will reflect a number of factors including the aggregate fees they have paid over the past two and three quarter years since the launch of the portal in late January 2015.
The landscape for an OTM float will be challenging: the housing market and transactions are in a trough, and the lettings sector is facing seemingly non-stop regulation changes; however new build volumes look likely to stay relatively strong. On the stock market, both traditional agencies like Countrywide and Foxtons have seen share price declines over the long term; more recently, Purplebricks has seen a significant drop from its summer high.