Miller looks to flotation as option for Blackstone exit

MILLER Group, Scotland’s biggest housebuilder, is weighing up a possible £400 million flotation, trade sale or demerger of the business to capitalise on the recovery in the UK housing market.

Chief executive Keith Miller is one of the firm's family shareholders.  Picture: Phil Wilkinson
Chief executive Keith Miller is one of the firm's family shareholders. Picture: Phil Wilkinson

The Miller family gave up majority control of the business to Blackstone, the private equity giant, in late 2011 and it is understood the company has held a “beauty parade” of possible financial advisers to consider all options.

If Miller – which also has construction, commercial property and a small mining business – goes public it will join a flurry of property companies to test the stock market waters recently against a more benign sector backdrop.

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The sector has been boosted by recent official initiatives such as the UK government’s Help to Buy scheme and the Bank of England’s Funding for Lending scheme (FLS) that has driven up mortgage approvals.

Upmarket estate agent Foxtons made a strong market debut on Friday, while housebuilder Crest Nicholson floated at 220p last February and is currently trading at more than £1 above that.

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Mark Hughes, housebuilding analyst at Panmure Gordon, said that if Miller Group’s owners did decide to float the company the timing was good.

“Yes, it is a good time to float on the market. Housebuilders are trading on a good premium to net asset values [NAV].

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“This is largely because the housing market has been improving. First it was a slow recovery in London and the south-east of England that gradually picked up momentum.

“But since the introduction of stimulus measures such as the government’s Help to Buy scheme there has been a more widespread geographical recovery in the housing market. At the very least some prices have stabilised.”

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Analysts said it was difficult to put a precise likely stock market value on Miller, but that sector share prices were trading on average about 50 per cent above housebuilders’ NAVs.

In its 2012 annual report, Miller’s put its NAV at £236.5 million, possibly suggesting a market capitalisation in the £350m to £400m range.

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However, one valuation obstacle is that Miller is not a pure housebuilder, and construction, in particular, has not recovered at anywhere the rate of the housebuilding sector. It is also understood no flotation is imminent, and all other options remain firmly on the table. A flotation would probably trigger a bonanza for Miller’s management and existing shareholders, led by chief executive Keith Miller, who hold about 8 per cent.

Blackstone owns 55 per cent, and as part of the group’s refinancing in 2011 Royal Bank of Scotland has 23 per cent, Lloyds Banking Group 9 per cent and National Australia Group 5 per cent.

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Earlier this month the company delivered a ten-fold rise in half-year profits to £4m from £400,000 a year earlier as revenue grew 27 per cent to £361.5m.

The company cited a “marked improvement” in the property market, and the results followed strong numbers recently from housebuilders such as Persimmon, Barratt and Taylor Wimpey.

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Miller declined to comment yesterday.