A new major listed estate agency worth at least £100m is planned to be built, created from individual agents put together to form a large single group. The plan is to float the combined business within two years.
The model appears to be to offer an alternative exit to owners of estate agency businesses that are struggling. The owners would not get money in the sale, but shares in the eventually listed business. The aim is that on listing, they would then cash in – assuming that the floated business succeeds.
The firm behind the initiative is Kleinsman Global, said to be a US private equity business with 250m euros behind it, and owned by former UK estate agents, brothers Paul and Ben Seabridge. A search on Companies House for Kleinsman Global comes up with the name of JWD 2 Capital Limited, with an address in Wyoming, and listed as a director appointed last November.
Paul Seabridge told EYE last night: “Yes – we are building an IPO in this space.”
EYE understands that there have been several meetings involving agents who may not have known each other before, and who are now subject to non-disclosure agreements.
Seabridge told us: “The model in short is we are looking to group together well run, profitable, debt free agencies to form a larger group which will then list.
“What is unique about the model is that rather than exit, each business owner will take shares in the IPO and continue to run their successful businesses.
“We are looking to raise around £15m on the markets and this capital will be spent by those businesses to buy up those agents that are struggling.
“The plan is to create a £100m market cap business inside two years by bringing together the best in class.”
Asked whether the plan would be to do this just once in the agency sector, Seabridge said this was the aim, but added: “We are also doing this in a number of other sectors not related to real estate – such as telecoms/IT, engineering, and training – for very similar reasons as to why we are interested in the real estate sector in the UK.
“Any industry where there is fragmentation, lots of change, barriers to entry etc, gives opportunity for consolidation and acquisition.”
In answers to other questions asked by EYE, Seabridge said that agency businesses are currently changing hands for 75% of what they were worth last year.
He said there is increased competition, from online agents, plus “talk of the big boys merging or carving up”.
He also said there is “lots of consolidation happening” and that for good operators, there was plenty of opportunity to acquire agents that have not adapted to change. He said: “It’s a buyer’s market, definitely.”
If a new £100m estate agency were to emerge, it would compare with the current market capitalisation of Countrywide at around £263m. Foxtons is worth around £202m, while The Property Franchise Group is worth £36m.
JWD Capital Partners is not alone in wanting to consolidate the industry but appears to be the only one taking this particular approach in estate agency.
There are concerns that putting together companies to form one listed firm in other industries may not always have worked out.
We were also told by one industry player that agents thinking of this kind of exit should do considerable research and take very careful independent advice.
Fundamentally flawed model .So how does bringing about a collection of disparate agencies huddled together under an umbrella going to produce any synergy?Especially where the intention of the individual business drivers are seeking to exit by flogging their shares. Thank you very much I’m off going to benefit investors? On the other end of the scale who wants to buy up a struggling estate agent and who is going to put it right
Who are going to be the BODS these individual agencies are going to answer too.Another set of industry outsiders with a clutch of corporate directorships like CWD and we all know what happened to shareholder value there
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Sounds great..hand over the keys and hope its worth something after they sell out to stock market.
I was interested until you said brothers…. purplebricks are brothers…
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Sounds dodgy, won’t work and don’t do it. Next…..
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I love what I am finding out about this company and individual. 6 companies prefixed JWD have been set up since last year. Paul Seabridge on his website says he owns Kleinsman Global LLC a US based Private Equity, Mergers & Acquisitions Firm. The Kleinsman Global website has a bio of the senior exec’s and they are introduced simply as Paul, Ben, Martin and Lee (the only major firm I have ever seen in investments who have their about us section carried out like this!)
I looked up the Registered address for Director Nigel Paul Seabridge and according to Rightmove, is a semi detached house sold in 2005 for £164,100…not quite the registered address I was expecting!
Younger brother Ben Lloyd Seabridge has his registered address at Unit 2 at the same address/postcode. Out of his 16 appointments, he has resigned from or dissolved 15 positions including insolvency of Thomas C Adams Residential if any one has heard of them.
Now where’s that £100m..it’s in safe hands……
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Jesus! Another one How many investor gurus with no previous track record, but still with big appetite and unjustified ambition are out there???
JWD Capital founded last year, no accounts filed, no team, no obvious financial backing, but an appetite for a £100m IPO. Have these people (or this guy) ever had an experience in raising money? Even £1-2m? Any serious financial institution backing them?
Why would an investor want to back people who are looking to sell their business This is fundamentally against the concept of backing an entrepreneur. And if you are so keen to sell your business at least sell it to professional companies focused on acquisitions.
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There is a diffferent alternative to this, where independents maintain their autonomy, individuality and identity, but benefit from a collective arrangement……Collective Marketing.
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V i mean this with the very best intentions.
You need to stop with the cryptic posts on your idea.
Either ask Ros to run a story for you or if you are not ready keep your powder dry.
All you are doing is damaging your chance of a launch being taken seriously.
I hope you do not take offence not the meaning of this post.
Whatever it is, I genuinely hope it works for you.
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“whatever it is I genuinely hope it works for you”
Come on be honest, you’re being patronizing aren’t you?
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Not at all.
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Eastsidestory90
I’m struggling to see where you get the idea that smile please was being, in any way, shape or form of the word, patronising toward AgentV.
In my eyes he was simply doing what Agents are meant to do – giving best advice.
Apparently however you don’t see it that way.
That being the case how would you recommend AgentV continue with his plans?
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And that little polite exchange of views sums up why the Seabridge’s idea will never see the light of day. If they could get that many agents to all sign up, they would at the very least deserve the Nobel peace prize.
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The art of herding Estate Agents is probably a tad more difficult to master than the act of sewing a button on a f@rt whilst juggling jelly in a sandstorm.
Without using your hands.
And with your head in a sack of wasps.
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Been there.
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I have that T-shirt.
(actually, I have two – which are laced together and I wear them like a tabard…
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“The art of herding Estate Agents is probably a tad more difficult to master than the act of sewing a button on a f@rt whilst juggling jelly in a sandstorm.
Without using your hands.
And with your head in a sack of wasps”
Pee Bee this is possible the best ever comment on Eye – made me laugh a lot.
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Not sure about “best ever”, J1 – but thanks to you I’ve made “Comment of the Week” once more!
Muchly grateful!
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And the terms and conditions are what? and the brothers expertise and track record in such an adventure is what? The JWD 2 Capital Limited are who and related performance to date? Yes you should do considerable research and take very careful independent advice.
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Do they understand the tax and other cost implications for the joining businesses? I suspect they do not.
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Interesting…
On the day that this is announced, SKY News plop out a report that eMoov and Tepilo are set to come together in a £100m merger.
Wonder what the name will be?
TepiMoov?
eMoopilo?
Or – what about a three-way tie with the self-appointed ‘champion’ of industry users?
Homeowners Alliance Real Estate…
…H0ARE for short.
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They all aim for £100m.
How do these companies get valued?
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Paul Seabridge here – this story has not been reported correctly frustratingly – we are bringing together a group of independent, well run, highly profitable debt free estate/letting agents that are geographically diverse. At the time of writing the group consists of circa £15m revenue, £3m EBIT and fixed assets of over £5m, 3000 property sales & approx 3500 units under management. We will soon be releasing details of the group. These businesses are in my opinion best in class and each business owner sees an opportunity to grow in the current market. With the rise of online agents, talks of some of the bigger chains breaking up / merging, impending regulatory change – this gives opportunity for good agents to acquire those that haven’t adapted/changed in the current market. By listing this group of agents gives us access to the capital markets which gives us significant funds to be able to go and acquire these ‘distressed’ companies to form an even larger group. So in effect its a buy & build model. The agents coming in on this are not looking at this as an exit, but more as a war chest of funds to go and buy & grow. Its quicker to grow by way of acquisition than trying to do so organically. They will retain their independence, we are not looking to merge them altogether and operate under one group/brand. This is what we believe makes this model unique – each business will continue as is, but has access to much greater capital to expand. Only 25% of the issued share capital of the group will be offered to the markets, the remaining 75% being owned by the original founding businesses/us.
Some people have made some comments on here about the group – JWD referred to is a company I am involved in but actually has nothing to do with this. I have been involved in buying and selling businesses for a number of years – I have mainly been involved in buying ‘distressed’ companies – not just in estate agency, but across a number of sectors. When you buy distressed companies with significant debts/cashflow sometimes insolvency is the only way a business can be restructured/reengineered – only last week did we see reports of Humberts going into administration – a process to enable the company to restructure and continue in a new guise. Whether people like insolvency or not, its a fact that it is used by many as a way to rescue. The UK saw the highest number of insolvencies in the first quarter of this year since 2014 (almost 5000!). Look at Dragons Den, the reason they take high equity stakes is that over 80% of startups fail in the first 5 years so you have to hedge your risk. Anyway JWD focuses on distressed assets.
Whilst I am a director of some companies in the UK, I have invested in/acquired/bought/sold over 20 companies in the last year and actually now rarely appoint myself as a director, because I am not usually operationally involved [I work with consultants, other equity partners that get involved in that side]. I actually no longer live in the UK and most of my business interests are registered in the US & Cyprus.
Anyway, this IPO is being backed by a VC fund & PE firm [collectively over 200M EUROS] and through Kleinsman Global in the US. In fact we are doing this buy and build model in a number of sectors, not just real estate. Whilst I am the lead on this in the UK some of the investors behind this are hugely successful entrepreneurs.
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I am not sure what is worse with the above reply – grammar or the idea.
Let’s start:
1) VC and PE funds: these entities never work together. Their model is just different. Can you make them? Who are the ‘known entrepreneurs’?
2) Acquisition model: assuming that you don’t plan to re-live Countrywide’s M&A plan, I assume that you’ll be financing it with capital raised. £15m should do for – 1? 2? 3? acquisitions at best. Who will run the inefficient entities then? Who gets the properties? Unclear at best, but more likely just not developed as an idea.
3) Decentralised model – if there are no economies of scale, what is the virtue of the new entity? It’ll only destroy value (e.g. head office, marketing, lawyers)
4) £100m IPO- why would sophisticated investors go after an industry that has written off 50% of its market cap value in 5yrs time? What kind of innovation do you offer here?
5) please address the concerns above- no one knows who you are; what you have done; who is financing it; what is your management plan to justify such an adventure; who are those amazing agencies that already agreed to give their successful businesses in return of shares in an aspirational company;
unless the above is answered, it feels very much like two guys in a pub after a few pints, who came up with ‘a plan’
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To address your points:
1) VC and PE funds: these entities never work together. Their model is just different. Can you make them? Who are the ‘known entrepreneurs’?
VC is being used to acquire BEFORE we list (they get their money back post float)
PE is being used to fund the IPO
2) Acquisition model: assuming that you don’t plan to re-live Countrywide’s M&A plan, I assume that you’ll be financing it with capital raised. £15m should do for – 1? 2? 3? acquisitions at best. Who will run the inefficient entities then? Who gets the properties? Unclear at best, but more likely just not developed as an idea.
We have spoken to over 100 agencies – several we have ‘deals’ lined up to acquire – some will be acquired prior to listing, some after. £15m will buy approx 20. This will give us an additional 7-figure EBIT based on current and an increased management book of around a further 4000 units.
Not all are distressed, some for example are retirement sales.
We are not following Countrywides M&A plan at all.
We are NOT USING DEBT we are using equity. So we are not going to borrow money to buy we are raising capital.
The founding businesses that start this will be the ones that acquire & run entities.
3) Decentralised model – if there are no economies of scale, what is the virtue of the new entity? It’ll only destroy value (e.g. head office, marketing, lawyers)
We are not looking to centralise functions – but even in this model there will be economies of scale. It doesn’t destroy value it actually creates value – running a business is lonely – what we are saying is we are bringing together some really talented entrepreneurs/business owners and as a collective they have access to more resources, more knowledge , more capital to grow & scale
4) £100m IPO- why would sophisticated investors go after an industry that has written off 50% of its market cap value in 5yrs time? What kind of innovation do you offer here?
Its not a £100m IPO – [I said the story was not reported correctly] we are likely to list at around £50-60m (total market cap). The idea is that we can grow by way of acquisition and push market cap to the £100m mark in 3 years. Our peers are trading between 10-20 times earnings. So if we spend the £15m on acquiring even just £1m worth of additional EBIT well even at the lower valuation of 10 times earnings, thats an additional £10m in market cap.
In terms of investors – we have spoken to over 4000 city investors, institutions to research this. I.e. if we did this would you invest. 79% of investors would invest for the reasons outlined. Whilst there is inherent risk with any business we believe that because only a small amount of our shares are available for sale, because we are floating at the lower end of the PE ratio of our peers (supply & demand not many shares, competitively prices = drive value up). Secondly we are not spending the capital on bells and whistles we are buying up additional revenue, profit, balance sheet assets – so with every acquisition we increase our revenue, assets, management portfolio [long term contracted revenue is a proven way of driving P/E ratio].
What do investors like to see? Revenue growth, profit growth, long term contracted revenue growth etc. etc.
This coupled with a fragmented market with so much consolidation opportunity is why we believe 79% of those we have spoken to about this are interested. We are not selling a few hundred quids worth of shares to your average estate agent or Mrs Jones down the road who wants to stick some money in stocks & shares. These are city institutions, pension funds etc. who want a return on their investment. They may buy hundreds of thousands of shares in blocks. In fact we already have commitment from around half the capital and we haven’t even launched it yet!
We are not trying to replicate any of our competitors in how we are building this model
5) please address the concerns above- no one knows who you are; what you have done; who is financing it; what is your management plan to justify such an adventure; who are those amazing agencies that already agreed to give their successful businesses in return of shares in an aspirational company;
I have told you who I am
When we launch the IPO we will do so with an announcement of the PE/VC partners we are working with
I think I have addressed the plan above
We are unable to release at this stage who the founding members are, but we will be doing so when we launch the IPO.
Keep tuned and we will keep you updated
I am dyslexic so sorry if my grammar & spelling doesn’t live up to your standards.
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Hi Paul,
Do you have a track record in listing businesses? Could you please let us know who are your investors? PE don’t invest in IPO, they actually do the opposite. Mutual, pension funds invest in IPO. Who are the funds that agreed to back you? Could you please provide the details of at least one fund?
Could you please also provide the details of at least one sizeable turnaround story that you were involved?
Thanks
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I deliberately did not comment on this story yesterday as i did not feel there was enough information.
After reading Paul’s comments things are clearer.
I think what a lot of people have to realize is, it’s not just about being a profitable business. It’s about raising the share price. I think some people struggle with this concept.
Take PB – We in the industry know they are rubbish, i expect the owners know they are fighting an uphill battle to be the ‘Amazon’ of the estate agency world. But they have become very rich trying.
By launching with debt free agencies they should list at a high price, the further funds they have they can acquire further businesses which as pointed out increase EBTIA – Adding further value to the shares.
Well done to him and the owners of independent agents. Its a smart idea which will make a few people very wealthy.
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It’s a con. Increase the share price of a **** company using investors funds. Someone along the line eventually loses his shirt. But, hey, if people out there are stupid enough to invest……………
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A company is set up in a jurisdiction in which asset / financial/beneficial owner reporting requirements are less stringent, in order to benefit from advantages by hiding said details. Use this company as a cornerstone investor / huge investment pot to gain the confidence of multiple businesses to secure ownership of businesses. Borrow against said businesses to pay for the IPO and float to gain the uplift. “Cornerstone” investor gets the majority share of the profit.
A question would be: why incorporate in Wyoming? All the gang is based in the UK.
Similar schemes active with same promises across many sectors. “I have a cornerstone investor”. This entity is the majority shareholder / corporate director in a UK plc.
Any new fund makes the declaration of support from its founding partners to assure stakeholders of its professional intent. All of this is run from a two bedroom house in Wales.
You can even get his book on Amazon. He’s a SELF PUBLISHED author. Quite the self-promotor. He must have a long list of references to previous successes.
Apparently suggested as a name of interest. Oh, I see he has moved out of the country!
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