Countrywide takes £500m float gamble on housing market lift

Countrywide has unveiled plans to join the FTSE 250. Picture: TSPL
Countrywide has unveiled plans to join the FTSE 250. Picture: TSPL
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Estate agent Countrywide is set to trump Crest Nicholson’s recent £550 million float after unveiling plans to join the FTSE 250.

The company, which was listed for 21 years before being taken private at the top of the market in 2007, is hoping a fragile housing market recovery will be enough to tempt investors amid growing demand for new issues.

It plans to raise £200m by selling shares in a new holding company controlling the business, and will use the money to repay some debt and grow the business, including acquisitions.

Countrywide did not reveal what size of stake would be sold, but the deal is expected to be bigger than that of housebuilder Crest Nicholson, which floated at £550m and saw its value soar above £600m once shares began trading last week.

No date has been set but brokers Credit Suisse, Goldman Sachs and Jefferies have been hired as bookrunners and the initial public offering is expected to start within “weeks or months”.

However, the company is unlikely to match the £1.1 billion paid by US private equity firm Apollo to de-list it in May 2007. Fellow private equity firm Oaktree Capital took control in 2009 via a debt for equity swap, and both groups will retain holdings following the flotation.

Chief executive Grenville Turner, a former head of HBOS’ Intelligent Finance internet banking business, said Countrywide should be large enough to be included in the FTSE 250 Index.

He said the IPO market was functioning normally again following the financial crisis, and was also encouraged by signs of improvement in the mortgage and housing markets.

“Sentiment is much stronger than it was five years ago and the availability of affordable mortgages is coming back,” he added.

He said: “Over the past six years we have transformed Countrywide into the UK’s largest integrated property services group. We have worked hard to secure significant growth opportunities via acquisitions and by opening new high street branches. We have built market leading positions in each of our core businesses.”

He said the flotation would help the group continue its growth strategy with “further investment in both distribution and quality of service”.

Although data suggest house prices remain more or less flat and there has been only a small pick up in transactions since the credit crunch, Turner said interest in buying homes was increasing across UK.

Countrywide, which sells and rents houses and flats, makes 25 per cent of its revenues in London and the south-east of England, where the housing market is most bouyant.

The company reported underlying profits of £63m for 2012, on revenues that rose 6 per cent to £540m.