Martin & Co, the UK’s largest single brand residential letting business, will start trading on Aim before the end of the year as it seeks to take advantage of a “fragmented” but growing market for rental properties.
The company hopes to raise £15-17m from the flotation, and expects to be valued at around £30-35m. With anticipated year-end pre-tax profits of £1.92m, the company would be trading at an earnings multiple of just over 15.
Martin & Co will release shares worth up to 50 per cent of its value. The agency has a 1.7 per cent share of the overall letting market in the UK. Although this figure is small, it is the largest business in the sector, underlining how fragmented the market is.
Mr Wilson said the company is likely to pursue acquisitions of smaller rivals. “In a fragmented marketplace there’s always someone who can come in and consolidate.”
Privately rented households in the UK have increased by 50 per cent over the 10 years to 2011, according to Census data.
“Even for people within the industry, it’s surprising the extent to which letting has mushroomed,” Mr Wilson said.
Martin & Co, which set up business in 1995 by founder and chairman, Richard Martin, manages 30,000 residential properties.
Martin & Co (UK) Ltd operates through a franchise model where individual business owners – often with a successful corporate background – need initial capital of £80,000-£90,000 in order to let and manage properties under the Martin & Co brand. Franchise owners then pay 9 per cent of their revenues to the company.
In a message to the franchise owners, chairman Richard Martin said: “I am pleased to confirm that Martin & Co (UK) Ltd is to seek a public listing. The conclusion of this process is expected before the end of 2013, at which point the business will become a Public Limited Company (PLC) and its shares will be openly traded on the Exchange. The trading company Martin & Co (UK) Ltd will remain and MartinCo PLC will become its holding company. All of the other arrangements and legal agreements which we have in place with franchise owners will be unchanged.
“This is an entirely positive development for the Martin & Co Group and all of its franchise owners and employees. A public listing will provide a platform to raise new capital which will be used to further expand and develop our franchise owners’ businesses through a programme of acquisitions. We may also use the funds to enable us to expand our footprint into new territories by assisting with the re-branding of competitor businesses, who may wish to develop with the backing of the biggest property franchise brand in the UK.
“We will continue to re-invest our Management Services Fees in support of franchise owners. We will soon be announcing details of the team of five Regional Franchise Support Managers which we have assembled to provide more intensive, pro-active, hands-on, practical support to franchise owners to further increase new business levels. We have also recently appointed a Social Media Marketer, an area in which we recognise that there is much more work still to be done.
“Becoming a public company significantly enhances the already high stature and credibility of the company, and will raise our profile in financial and high net worth circles of influence - something that will benefit us all.
“As part of the process, it is the intention of the founder shareholders to sell some of their original stake to institutional investors to create a liquid pool of shares. Nevertheless the remaining holdings will be significant and I can assure you that the founders and the current management will continue to work together to secure the future prosperity of the Group.
“It’s also worth noting that the board of any PLC is subject to extensive ‘checks and balances’ to ensure that independent investor interests are being properly protected and that the company is well run”.