Agents’ Mutual, the agent-owned company which owns the OnTheMarket property portal, this morning formally announced its intention to form a new parent company, OnTheMarket plc, to list on the AIM market of the London Stock Exchange.
The ‘one other portal’ rule will be dropped.
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 heavyweight TV, digital and print media campaign. Funds will also be committed to expanding OnTheMarket’s sales and account management organisation and development of its technology.
There will also be a new estate agents’ recruitment strategy.
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 members currently number some 2,700 estate and letting agency firms, and this morning said that around 5,700 agent branches list with OnTheMarket.
Currently the members have one membership interest per firm but, following the reorganisation into OnTheMarket these firms will receive ordinary shares reflecting, amongst other factors, the aggregate amount of fees they have paid in order to list on the OnTheMarket.com portal since its launch in January 2015.
In order for the IPO 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 September 6 at a ‘Members Court Meeting’. There will be a similar arrangement for Agents’ Mutual 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.
To support the plans, members will need to commit to a new five-year listing agreement with the Company. The new agreements will supersede the existing agreements at the point of IPO.
With the increased funds supporting marketing and the expected step-change in growth following the IPO, the company’s new listing agreements will no longer include the ‘one other portal’ (OOP) rule which is a term of all existing listing agreements.
Agents’ Mutual said 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.”
While the ‘one other portal’ rule will be dropped, it has not yet been clarified whether the ban on online/hybrid agents will be continued.
However, Russell Quirk of eMoov told EYE: “I’m all ready to list eMoov’s inventory on OnTheMarket!
“If they’re dropping OOP, I presume they are no longer ‘banning’ value-for-money hybrid agents.
“An agent is an agent is an agent. Where do I sign?”
A spokesperson for Zoopla said: “Agents’ Mutual was founded on the principle of being 100% 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.”
Agents’ Mutual also this morning unveiled its new-look website: https://www.agentsmutual.co.uk/
The statement to the stock exchange is here: