OnTheMarket readies for AIM float with equity offer for new agents

OnTheMarket, the estate agent-backed property website, says it it ready to float on the AIM section of the London Stock Exchange in order to "challenge the dominance of Rightmove and Zoopla" with a big new marketing campaign.

Launched almost three years ago as Agents' Mutual with an associated onthemarket.com portal, demutualisation was voted through in August and now the company is looking to raise £50m and float as OnTheMarket PLC.

As announced in August 2017, broker and nominated adviser Zeus Capital will seek to raise funds by selling a minority stake of new shares to investors as part of the initial public offer. A potential market cap of £200-250m was being mooted in August.

Much of this new cash will be used to pay for "broad marketing campaigns" across all media, as well as investing in the sales department and in technology as part of the strategy to attract more estate agents and other property advertisers to use the website and grow the levels of traffic with property hunters.

In September, in order to allow the IPO to proceed, estate agency firms that were members of the Agents’ Mutual company voted in favour of converting their existing membership interests into ordinary shares in the new company.

In order to attract other estate agents into listing their properties on the portal, OnTheMarket will offer equity stakes to "selected new agents" alongside long term listing agreements, with arrangements to restrict them from selling their shares in order to "align their interests as shareholders with the success of the group".

Chief executive Ian Springett said: "We have made good progress against our plans first announced earlier this year. 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. 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."

Last month Springett was joined by Ian Francis, an experienced listed board executive at Paysafe Group and formerly as an Ernst & Young auditor, as his new finance director.

Analyst George Salmon at Hargreaves Lansdown said 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. It’ll be hoped the listing, which should bring a £50m cash injection, can help it find another gear."

He added: "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.”

Zoopla last month reported that the number of agents being won back from OnTheMarket.com had recently reached over 1,000.