Agents’ Mutual has confirmed that it proposes to form a new company, OnTheMarket plc, to list on the AIM market of the London Stock Exchange - and that it will drop the one other portal rule.
It will seek to offer a minority stake to investors, raising around £50m of new equity capital, which will be used to fund growth and to support a marketing campaign that it hopes will make an impact against Rightmove and Zoopla.
There will also be a new estate agents’ recruitment strategy; existing agent members will no longer have ‘one member, one vote’ but will instead receive ordinary shares reflecting their fees since OTM launched in 2015.
The company has engaged Zeus Capital as adviser and broker. The board is seeking a valuation for the company of between £200m and £250m.
Agents’ Mutual has this morning stated that it has around 2,700 estate and letting agency members, equivalent to around 5,700 branches.
In order for the Initial Public Offering to proceed, members must first vote in favour of converting their existing membership interests in Agents’ Mutual, a company limited by guarantee, into ordinary shares in a new company, OnTheMarket plc.
This vote is expected to be held on 6 September 2017 at a so-called Members Court Meeting.
There will be a similar arrangement for Agents’ Mutual Ltd Loan Notes to be exchanged for OnTheMarket plc Loan Notes which will be convertible into shares on IPO. Together, many Agents’ Mutual Members provided funding totalling £11m for the venture by way of loan note subscriptions.
Board member firms - Savills, Knight Frank, Strutt & Parker, Chestertons, Douglas & Gordon, Glentree Estates, Kinleigh Folkard & Hayward and Spicerhaart Group - have already undertaken to vote in favour of the scheme.
Agents’ Mutual has told the stock exchange this morning: “The rule was an essential element of the company’s entry into a property portals market dominated by two existing large players but has limited its appeal to some agents. The board believes its release at IPO will enable OnTheMarket to attract substantially more agents to list with it.”
Agents’ Mutual CEO Ian Springett said: “This is the beginning of a very exciting new chapter in our development. With the support of thousands of estate and lettings agents, we have rapidly established OnTheMarket.com as the third biggest player in the UK residential property portals market. For consumers and agents alike, we are committed to creating a genuine agent-controlled alternative challenger business and brand to the two leading incumbent portals.
“We believe that by raising capital from new investors we will substantially strengthen our market position. Agents provide the main property listings content and the main revenue sources for property portals.
“Our members’ ownership of shares in the newly listed company will enable them to remain enfranchised, aligned and fully invested in OnTheMarket’s future success.”
Meanwhile, a Zoopla spokesperson commented: “Agents’ Mutual was founded on the principle of being 100 per cent agent-owned, with equal shares for all members and run for lower marketing fees and not for profit. All that now seems to be out the window and the new plan to demutualise and float is a clear admission of failure to achieve any of its original objectives and is unlikely to be viewed as positive by many of its members who will no doubt feel betrayed by the broken promises including seeing the majority of shares now go to its board members.
"We continue to win back disillusioned agents from Agents' Mutual as we remain focused on providing the best value and most effective marketing, software, website and data solutions for all UK agents. We welcome, of course, the plan for Agents' Mutual to drop its anti-competitive 'one other portal' rule which has prevented agents from having a say in their own marketing decisions and has hurt consumer choice and exposure.”
Earlier this week Estate Agent Today revealed some details of the financial position of Agents’ Mutual, in the year to the end of January 2017.
Revenue for that year was £17.831m - almost exactly the same as the previous year’s figure of £17.851m. AM had an operating loss of £1.182m (in the previous year it was £1.729m) and pre-tax loss was £2.533m.
Once tax payments are taken into account, losses for the most recent year add up to £4.019m against the previous year’s figure of £2.306m.
EAT also revealed the list of ‘roadshow’ locations where chief executive Ian Springett - who also became a director of Agents’ Mutual last year - would speak with members this month.