OnTheMarket announces plans to raise £50m in London IPO
The money raised is expected to help lift the property portal’s profile.
The company behind OnTheMarket.com has announced plans to float the property portal on London’s AIM market in a bid to raise £50 million, but analysts have questioned its ability to challenge online rivals.
Funds raised for the estate agent-backed site – which was originally launched by Agent’s Mutual in 2015 – will be used to lift its profile through “broad marketing campaigns”, as well as to expand group sales, customer relations, and tech development.
It underpins a company strategy aimed at attracting more estate agents and property advertisers as well as to grow traffic and “engagement” with property hunters.
The initial public offering (IPO) follows plans to abandon its mutual status, confirmed earlier this year, as well as the successful signing of long-term listing agreements with property service firms and estate agencies including Arun Estates, Chancellors Group and Hunters Property Group.
Those listing agreements will come into effect after OnTheMarket’s IPO – though a date for the flotation has not been set.
Agent’s Mutual chief executive Ian Springett said: “Our demutualisation received overwhelming support from members, and more recently we have signed new long-term listing agreements with a number of leading estate agencies and property services providers.
“We are now well placed to list and raise new funds to challenge the two leading incumbent portals.”
But George Salmon, an equity analyst at Hargreaves Lansdown, said the task would not necessarily be easy.
“Backed by estate agents themselves, the launch of OnTheMarket in 2015 was meant to disrupt the duopoly of Rightmove and Zoopla. The group is now the UK’s third biggest portal, but all this really means is that it’s first among the also-rans,” he said.
The listing and resulting cash injection are expected to help the portal “find another gear”, he added, noting plans to ramp up advertising and raise brand awareness.
“In a business that’s all about generating the necessary scale, this seems a sensible strategy. However, there’s a difference between doing the right thing and doing the right thing successfully.
“The challenge of toppling Rightmove remains a significant one.”
The UK’s wider rental market is keeping a close on legislation that could ban letting fees for tenants, which could impact agency prospects across the country.
Plans for a letting fee ban were first announced by Chancellor Philip Hammond in his November 2016 Autumn Statement, and the Conservative manifesto for this year’s snap election promised to press ahead with the scheme.
However, the housing market – which has been softening in recent months – could be buoyed by a Government decision to abolish stamp duty for first-time buyers purchasing a property up to £300,000, with relief for those purchasing a property up to £500,000.
Commenting on OnTheMarket’s IPO, Mr Springett added: “We are excited about this new chapter in OnTheMarket’s development, which will strengthen our market position, and benefit our agents, investors and consumers using our services.”