Foxtons stormed on to the stock market ahead of its full listing, due to take place on Wednesday.
On Friday, shares bounced up more than 20%, starting at 230p and hitting highs of 286p in conditional or ‘grey’ trading, valuing the firm at more than double the £360m paid for Foxtons at the height of the property market boom in 2007 by private equity firm BC Partners.
The shares finished the day at 267p, valuing the agency at £753m.
Foxtons had floated at the top of its price range for a £649m valuation – roughly 18 times next year’s earnings. In March 2007, having earlier lost control of its purchase, BC Partners bought out the banks in a deal which reportedly valued the business at up to £250m.
BC Partners and other selling shareholders, including senior management who held a 20% stake in the company, will get £335m from the sale, while a further £55m raised will be used to pay off debts.
The shares floated have been sold to new institutional investors and represent 60% of the company. BC Partners has not disclosed how big a stake it or Foxtons staff retained.
Foxtons, which has 40 branches in London and a further two in Surrey, was founded in 1981. It charges an average commission of 2.5% and in the City of London has a market share of 33%. In trendy Ladbroke Grove, its market share is 25%.
City experts said they had seen little like the Foxtons float.
Chris Beachamp of IG said: “I can’t remember the last time I saw shares in a major company move so much on the first day of trading.
“Movements of 5% or 6% are common, but this is something else.”
Joe Rundle, head of capital at ETX Capital, described Foxtons’ debut as stunning. He added that low interest rates, continued government initiatives to induce first-time buyers and the general optimism over the global economic recovery, were lifting the outlook for Foxtons and other stocks geared to a UK housing market recovery, especially in London.
Foxtons’ debut on the stock exchange will have been watched with particular interest by Zoopla, which is contemplating a flotation.
Earlier this year Countrywide returned to the stock market, fetching 17 times forward earnings. Its shares have since soared 61%.
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