Foxtons, the estate agent, was backed by investors who think there is a recovery going on in the UK housing market (Reuters)
Estate agent Foxtons was valued at £649m in its IPO on the London Stock Exchange as bullish investors back the view that there is a budding housing market recovery in the UK.
Foxtons sold a significant chunk of its business at the top end of its share price estimate shortly before the markets opened in London. It shifted 60% of its shares at 230 pence each, having originally put the price range at 190p to 230p.
The shares were sold to private equity firm BC Partners and Foxtons' executives and employees, raising a gross total of £390m (€463m, $626m). Since the listing, Foxtons shares had risen by as much as 22% to 280p.
"We are delighted that our initial public offering has been successfully received and there has been strong interest from investors," said Michael Brown, chief executive of Foxtons Group plc.
"We welcome our new shareholders to Foxtons and we are looking forward to the next stage in the development of the business as a listed company."
Amid mortgage-easing schemes from the government and Bank of England, including Help to Buy and Funding for Lending, demand in the housing market is starting to build.
Some fear another housing bubble as supply fails to meet demand, meaning prices may be pushed artificially high. But others say prices are well below their 2008 peak in all regions except London and the south east, so there is much slack in the UK residential property market.
"Low interest rate environment assured by the BoE, continued government initiatives to induce first time buyers and the general optimism over the global economic recovery, not just the UK recovery, lifts the outlook for Foxtons and other stocks geared to a UK housing market recovery, particularly London," said Joe Rundle, head of trading at ETX Capital.
He added that ETX "experienced high levels of demand for Foxtons, as our clients expressed their general bullishness over the UK housing market recovery."
The Royal Institution of Chartered Surveyors (RICS) said UK house prices in August hit a seven year high.
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