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Foxtons Bosses In Line To Make £100M As Estate Agent Prepares Flotation

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http://www.theguardian.com/business/2013/aug/25/foxtons-estate-agent-stock-market

Private equity owners expected to announce intention to float chain on stock exchange for up to £500m

Foxtons bosses are in line for a £100m windfall as the notoriously aggressive estate agent prepares to float on the stock market.

The chain, famous for its pushy salespeople and eyecatching fleet of almost 1,000 decorated Mini Coopers, is expected to announce its intention to float in a listing valuing the company at £400m-500m on Tuesday.

Bosses could collect up to £100m from the near-20% stake they hold in the company. The chief executive, Michael Brown, a former Slaughter and May lawyer who collects pay and benefits of £1.3m a year from Foxtons, will be the largest single beneficiary after increasing his stake by beating a string of performance targets.

It will be the second time Foxtons has made its bosses millionaires. Jon Hunt, who founded the chain in a former pasta bar in Notting Hill in 1981, sold the business to the private equity firm BC Partners for £360m in May 2007 just months before the credit crunch sent property prices into freefall. Hunt is now worth £925m, according to the Sunday Times Rich List, and owns a mansion on Kensington Palace Gardens, known as "Billionaires' Row", complete with a car museum for his collection of vintage Ferraris.

So anyone on here planning on buying shares, you can't go wrong with property!

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Last time it sold, the market crashed.

I'm calling the top!

does sound a bit like someone trying to get out with their shirt in tact.

the investment is not for me....im out.

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To be fair Foxtons have really innovated and created huge value for UK Plc. House price delusioneering is now a major export industry.

Many a true word...

It would NOT surprise me at all to hear a politician proudly proclaiming that the New British Economy was catching on overseas

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Estate agents are ten a penny and common as muck these days sprouting up like weeds all over the place - and they want £500 million for one of them. Incredible - you could start up thousands for that amount.

Edited by billybong

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Estate agents are ten a penny and common as muck these days sprouting up like weeds all over the place - and they want £500 million for one of them. Incredible - you could start up thousands for that amount.

Yeh a Martin & C*** franchise is only £80k

Cheap Matallan suite and hair gel extra

http://www.whichfranchise.com/franchisorPage.cfm?CompanyID=991

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from the article

In recent months, the company is said to have started to offer to sell homes without taking a fee to boost its books before the flotation. The tactic has been branded "suicide bidding" by other agents.

I would be interested to know how they arrived at the 400mn valuation. I've lifted the above from the article. I do not trust estate agents.

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Interesting to see so many here predicting a bubble burst off of this news.

Not sure how to take it myself but naturally a business sells when they think things are going to go down. Or could just be thinking there are faster ways to make more money in other industries given the tighter margins they're working with.

Makes me think to hold on to Jan 2014 to throw my pennies in the ring of home ownership... maybe a short term rent would be better after all.

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from the article

I would be interested to know how they arrived at the 400mn valuation. I've lifted the above from the article. I do not trust estate agents.

It's based on £450m with £50m cashback. :P

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Interesting to see so many here predicting a bubble burst off of this news.

Not sure how to take it myself but naturally a business sells when they think things are going to go down. Or could just be thinking there are faster ways to make more money in other industries given the tighter margins they're working with.

Makes me think to hold on to Jan 2014 to throw my pennies in the ring of home ownership... maybe a short term rent would be better after all.

And for every seller there is a buyer thinking the opposite, so don't read too much into it.

Just read what Foxtons think will happen into it.

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from the article

I would be interested to know how they arrived at the 400mn valuation. I've lifted the above from the article. I do not trust estate agents.

Apparently they have 42 branches so that would be getting on for about £10 million per branch. Seems a lot even for London and nearby. Maybe some overseas oligarch is going to snap them up.

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Bbc has an article for the valuation at £649mn ahead of float. Yes as other poster said they have 40 branches. It might be a laugh to go through the numbers later. The investors must be expecting them to sell bucket loads of high priced London properties?

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The Foxtons near me recently leafleted offering to sell for 0% commission - usually they only do this for the first 3months with new branches, but my local one is one of their oldest branches so are Foxtons:

a ) nuts

b ) suicidal

c ) trying to put the other Local EAs out of business (in this case Winkworth, KFH, Hamptons...)

d ) fiddle short term metrics fro the float

e ) all of the above and more

Foxtons valuation metric

£649m/42 branches = £15.4m per branch

Assuming 2.5% sole agency fees (and ignoring costs) they would have to sell £616m of property per branch to recover (the investment)

:wacko:

Also total values of property sold would per equivalent to 1/56th of ALL the mortgage debt in the UK (inc MEWing)!!!

How quick do investors want to get a return on their investment? i.e. does this work for few years (pay dividends) then fall apart???

Edited by koala_bear

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According to companies house, profits since 2005: 8 million, 16M, 16M, -1.3M, 12M, 25M, 25M, 23M.

So, if we call that, 20 million profit per year average across the cycle. A fair valuation could be say 13 times earnings, which would value Foxtons at 260 million.

Whoever is buying Foxtons at 650 million is going to be very disappointed, unless they a lot of further growth.

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According to companies house, profits since 2005: 8 million, 16M, 16M, -1.3M, 12M, 25M, 25M, 23M.

So, if we call that, 20 million profit per year average across the cycle. A fair valuation could be say 13 times earnings, which would value Foxtons at 260 million.

Whoever is buying Foxtons at 650 million is going to be very disappointed, unless they a lot of further growth.

Agreed - but the potential for highly profitable growth isn't there.

Strong parallels with Ocado i.e. large market share at the top of the high earners - the very large number of lower earners just aren't and won't be as profitable.

If you go for the 13 times earning metric than they would need to grow to a double digit % share of UK property sales - the selling equivalent to Nationwide lending share???

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Not something I'll be buying into - the valuation looks high. I have some money in companies related to property including builders, as a (relatively minor) hedge against the fact I don't own a house. The only part of my investments which depress me when they go up...

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