The midas touch of property industry legend Harry Hill looks as though it has not deserted him. This week, he gave a masterclass in how to make £2.5m in five hours.
Hill’s new business, In-Deed Online plc, launched on the Alternative Investment Market on Wednesday, the first time a conveyancing firm has been listed on AIM.
It launched with a share price of 42p, making the company worth £8.75m. But by midday the share price had shot up 31% to 55p, valuing the new company at £11.23m.
In-Deed said it is aiming to become “a market leader in the highly fragmented £1bn conveyancing market within three years”.
The company has three full-time employees. The share prospectus says it plans to grow to nine by September.
In-Deed estimates the current value of the conveyancing market at £1.3bn, based on an average transaction worth £500.
TV’s Phil Spencer will be the public face of the service, and In-Deed has an 18-month advertising contract with the Digital Property Group, part of the Daily Mail, which runs Findaproperty, Primelocation and Globrix.
Around £3m was raised by the business pre-flotation and a further £1.6m is being raised through the sale of shares.
Ironically, Hill, 63, has not always seemed to believe in stock markets. He was chief executive of Countrywide when he decided to take the business off the London Stock Exchange, saying he was tired of “having to take his pants down in public” – a reference to the fact that he was continually having to make public announcements about the state of the business and the housing market.
After Countrywide went private, he became chairman, finally stepping down last year.
He is chairman of the new company which he has established with former 3i partner Peter Gordon, who is managing director. It was 3i which tried, unsuccessfully, to back Countrywide’s attempts to go private. Countrywide was eventually acquired – at the height of the property market – by US equity firm Apollo.
In-Deed is aiming to offer a transparent and fixed-price service via a panel of legal firms, who must promise to keep customers informed.
Many may query the timing of Hill’s new launch, given that housing transactions are low and not expected to pick up for some time, possibly years, according to some commentators.
In its prospectus, the company says transactions are running “well below” the 2010 average of 884,000 and its directors “are not forecasting a material recovery in volumes within their plans”.
They nonetheless believe that “historic evidence … would suggest there is potential for growth in the market”.
There is also the threat posed by the so-called Tesco law, which comes into force this October and will change conveyancing in the UK by allowing non-legal firms such as supermarkets and the AA to offer legal services. In-Deed said in its prospectus that it recognised the risk that the new regime could introduce many more competitors which would undermine its offering.
The document also reveals that the company plans to move into the will-writing and personal injury legal markets.