OnTheMarket ‘will not succeed as public company’, City analyst tells investors

A city analyst has questioned the chances of OnTheMarket succeeding as a public company. Meanwhile, the biggest losers appear to be those agents in breach of their contracts to Agents’ Mutual, who have had their membership terminated and will not receive new shares.

Anthony Codling, an analyst for Jefferies, said yesterday in a note to investors: “So will Agents’ unmutual be more successful than its former mutual self? We think not.”

Jefferies advises Zoopla, including on Zoopla’s own highly successful float three years ago, when Zoopla was reported to have 19,000 agents and developers paying to list on it.

As EYE reported yesterday, the vote was overwhelmingly (89%) in favour of Agents’ Mutual demutualising.

The Initial Public Offering (IPO) is intended to raise £50m, with the new company likely to be valued at between £200m and £250m.

The money raised will go towards marketing, including TV advertising.

The IPO will also facilitate the issue of new shares to encourage the recruitment of new member agents.

However, Codling queried whether a one-off raise of £50m would allow OnTheMarket to achieve its aims, “when Rightmove and Zoopla combined spend a similar amount on marketing annually”.

He went on to pose further questions, including whether OTM would hike advertising costs for agents, and why were agents leaving.

He also asked what the election turnout was, and whether there is room for a third portal.

He concluded: “We don’t expect Rightmove will lose much sleep over the vote, and the dropping of the One Other Portal rule (the rule so expensively defended by Agents’ Mutual a few months ago) would appear to benefit ZPG more than OTM.

“To succeed, OTM needs the critical mass that has so far eluded it.”

Meanwhile, the big losers look to be those member agents in breach of their listing agreements with Agents’ Mutual.

Letters have gone out to them warning that if they had not rectified all aspects of the breach by the end of August, their membership will have been terminated. They would not have been eligible to vote on the members’ scheme, and nor will they receive new shares.

However, their listing agreements will remain in force, and both their previous amounts owing and future amounts will be due and payable.

It is not known how many agents are still in breach but we understand that the figure of 600 was mentioned at one of the roadshows.

Yesterday evening, a spokesperson for OTM told us:  “Under the company’s articles, Agents’ Mutual may terminate the membership of any member in breach of their listing agreement.

“In the members scheme documentation we sent out in August, we explicitly alerted members in breach of their existing listing agreements that if they did not choose to rectify their breach or enter into a new listing agreement by August 31, they would have their membership terminated.

“Their existing listing agreements with Agents’ Mutual remain in force and Agents’ Mutual reserves all its rights under these agreements.”

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32 Comments

  1. Typhoon

    Course he would say that. The thing with sooth sayers, is that they have a 50/50 chance of failure or success. So if it suits the circumstances to spin the negative,they will. Sometimes they will be right. This time however they will be wrong ( BTW I work on same 50/50 ratio!!!!!)

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    1. Bless You

      Wow i think that this must be the first time a business has ever floated to stay alive…most businesses use it as a measure of success….

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    2. AnotherPlanet24

      Very sadly, OnTheMarket is now pointless

      It will spin some very lucrative returns for those who cleverly positioned themselves

      There were other options. Personal financial gratification won – absolutely no surprise

      The silliest part – having steered the Mutual OTM into fateful waters Captain Springett & Company will receive Millions

      It’s almost laughable. No, it’s shocking

       

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  2. smile please

    Of course it’s doomed. Agents did not get behind it when it was FOR the agents.

    They sure as heck will not be behind it when they have rebranded as Rightmove with the same killer prices.

    RIP OTM it was a nice idea while it lasted.

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    1. aSalesAgent

      “Of course it’s doomed. Agents did not get behind it when it was FOR the agents.”

       

      The website was for agents, NOT for sellers and that there was my problem with it. I understand the reasons for the ‘One Other Portal’ rule, but I felt it would have been a disservice to clients if an agent were to drop Rightmove or Zoopla in favour for a website that buyers knew little/nothing about (not unless the seller knew the score (and presumably charged a cheaper fee for a reduced level of marketing (comparatively))).

      If OTM were to simply drop the OOP rule they might have found many more agents signing up.

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  3. Essjaydee51

    I thought we agents were savvy! Who on earth signs up for five years and leaves themselves open to a termination of service but still owing all monies for the duration of the contract if they breach the rules!! How unfair is that that the portal wins from every angle, surely that’s wrong.

    i have seen and heard all the complaints and shortcomings of otm (and the sycophants expected defending) so they have a case for failure to provide their side of the contract (service) and surely after winning a major case on the oop argument then dropping the oop, then surely that losing agent has a case for an appeal!

    Still more interesting times ahead I guess.

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  4. RealAgent

    I stopped reading after advises Zoopla……

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    1. Robert May

      Without considering that Zoopla’s bank might have a detailed understanding of the numbers involved in attempting to challenge Rightmove.

      Going head to head with a £4.6b and a £1.6b firm with £50million is like pinging peas at the moon. £50million is a fair chunk of money by our standards but from what I hear  it isn’t the sort of deal that would get many of us past the reception staff of the fancy banks in the city.

      “I’d like to discuss a £50m deal with someone!”  ” Certainly, let me see if I can help, there’s branch of Lloyd’s on the corner of  Cheapside and Queens Street, I think that’s the nearest one if you’re walking.

      No-one could accuse me of any allegiance to ZPG but I also question if £50 million is enough to take on RM and Z at their own game when  Rightmove could drop their fees to match the new OTM price list and still be making gross profits in excess of HOW MUCH?!

       

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      1. HITMAN32

        If only RM dropped their price then OTM would never have formed, Lets see what you think in the future when RM increase their prices as they have promised their shareholders to Minimum of £2500 per branch.

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        1. 1stTimeBuyer

          If high street agents dropped there price, surely online agents wouldn’t of formed in the first place?!  Not that straight forward when you look at things from a different angle is it.

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          1. PeeBee

            If I may offer some constructive advice, 1TB – go sit somewhere quiet; think really hard, and decide on a sensible ‘angle’ of debate – and then post it using correct spelling and grammar.

            Otherwise you could just look like one of those eejits who clearly get their rocks off by coming on here and chucking a lit firework in the room.

            And you wouldn’t want that – would you?

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  5. AgentV

    The saddest part of OTM is that I now just can’t help wondering if the whole situation could have been so different from the start.

    What if initially they had tried to get nearly every single independent agent on board at a no brainer monthly cost, without the OOP rule, whilst at the same time developing their main marketing thrust around a dual ‘raising public awareness and generating vendor business for members’.

    They would have had loads more stock to raise awarenesss from the start, and then they could have localised high profile marketing area by area.

    In OTM we had a vehicle to try and fight back against the derogatory marketing of the online listers…..now it’s likely to becoming a massive promotional stage for YOPA……a very sad day yesterday!

     

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    1. Bless You

      I thought OM it was started by some london agents doing it for the good of the industry….   was sprigget using their names to make it sound like a genuine company?

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  6. David B

    Argh the remarkable you can vote yes but not no upgrade to the arrears articles?

    i wonder how many of the potential 600 would have voted no if they had been allowed too?

    How can the board so materially change the initial contract by initiating an IPO then expect no voters to continue paying their subs? Is it not the board that initiated this breach of the original contract?

    Surely dropping the OOP rule will only strengthen Z?

    How many new members will join OTM now they shall drop the OOP rule?

    if OTM were really bothered about attracting new members I presume a survey was done to establish this?

    Was this really a vote to take ownership of a very large chunk of our business to sell on?

    i suspect time shall shortly tell.

     

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  7. eltell

    The ‘new model’ that OTM has become is a complete reversal of the aims of the organisation I signed a 5 year contract for and which I wouldn’t have touched with a bargepole if it was the original proposition. Surely any breach of contract lays with the management of AM rather than the original investors who have been sold down the river by IS & Co?  Perhaps the 11% disillusioned shareholders should cancel their direct debits and walk away from this sorry mess.

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  8. MichaelDay

    Not sure that those agents that stopped listing with OTM and have had their contracts terminated will see that as losing.

    Those agents that did so, did so based on what they saw as the lack of benefits in using OTM.

    Not being tied in for another five years will surely sound huge sighs of relief!

    They may miss out on some possible future share value but will, presumably be much happier with their marketing activities and results in the interim.

     

     

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    1. Industry_Pro

      Those that are in breach and as a consequence are no longer able to use OTM are still contractually bound to pay the outstanding past fees and future due fees for the remainder of the contracted service. A Lose Lose situation….!!

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  9. Chrispy

    I might be thinking in very simple terms but would investors not be looking at past performance when deciding to invest or not?

    Could there really be enough of them looking to take a punt on something that so far has delivered nothing in terms of market share?

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  10. mrtickle

    I’ve said it once and I’ll say it again. OTM will never compete with zoopla or rightmove regardless of how it is packaged.

     

    Best of luck but this ipo is going to be like forcing a steak down the throat of a baby bird, while the two mature eagles circle by, ready to pinch the leftovers.

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    1. Beano

      Mr Tickle you are a genius, any chance of the lottery numbers for Saturday?

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  11. Robert May

    You lot need to be fair to Ian Springett he has put, as the saying goes, his large male chicken* on the block and said he is  going to  produce a portal with 19,000 branches of estate agents,  new homes builders and the more credible internet listers as a low cost alternative to the dominant duopoly. 89% of existing members who voted believe him.

    A lot has been made of his £20m payday if he succeeds, I say that is cheap, a bargain; the last person to  achieve all of that, last time it was reported was  worth £100,000,000 but that is now probably worth in excess of £160m.  Fair play to anyone who has the nads to stand in front of this industry and have a go.   Be critical of the way it is achieved but don’t be critical of the achievement or the ambition.

    Personally I think as many challenges  have be created as opportunities gained but without knowing the outcome of who has been enticed on, and who has been thrown off it is hard to see how this new 5 year marathon will end up because at this new starting line there is quite a lot of  unknowns and uncertainties.

    What is  a cert; Ros and Nick will be kept busy for a good while to come

     

    * ****

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  12. DesRes87

    The only way the ‘New’ OTM can work will be through bringing on board the major corporates who will receive large share allocations and generous bulk discounts for doing so.(In the hope that it will entice others)  Await the announcements over the coming weeks.

    The new strategy could only have been countenanced if there was already an ‘understanding‘ among the major players.

     

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    1. HJ12

      Great news – It’s exactly what OTM need! Bringing on a few larger firms will increase market share and property listings and yes they will open the door for for more new members to follows – cannot wait for the day this happens.

      This will mean more revenue, more consumers which potentially will equate to more leads – personally I don’t see what the problem is?

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  13. AgencyInsider

    Codling queried whether a one-off raise of £50m would allow OnTheMarket to achieve its aims, “when Rightmove and Zoopla combined spend a similar amount on marketing annually”.

    He misses the point that OTM doesn’t have to take on both RM and Z at the same time. OTM’s original aim was to push Z into third place before taking on RM. I know everything else they had planned for OTM has gone out of the window but I would expect this to still be the strategy.

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  14. El Burro

    So Zoopla’s advisers rubbish OTM. That’s a story??

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  15. GPL

    After the Court Sanction Hearing on 11th September….

    After any Objections are considered by the Judge….

    Assuming it is trumpeted through with a Blistering FanFare?

    Then, as Robert May observantly comments the “Nads” are well and truly poised either to be worn as Crown of UK Portal Success or to be kicked down the road into history.

    As Fox Mulder chose to “Believe”… so “The Believers” will hope “The Truth is Out There”…

    I and others will judge simply on performance and results.

    The “restrictions of OTMV1” will apparently be cast aside and OTMV2 will deliver…. I’ve got the Reserved Seating of the remainder of my OTMV1 Contract to watch this game develop.

    Odd really, I paid for a Ticket for One Game, now I am forced to pay for a Ticket to watch another Game which I expressly Voted NOT to watch?

    If I didn’t know better I would think I was in the “Twilight Zone”….. overnight in hospital last night (honestly) they were recording my Heart etc …..and this morning I got home. The Good News? “GPL, an Estate Agent…. has a Heart!”.

    ……and to our NHS…. Thank You sincerely for all the work that you do. I am personally very grateful that the NHS is “Not for Profit” …..it just cares for people. Nurses, Doctors, Auxilliaries, Receptionists, Porters etc 10/10! Thank You.

     

     

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  16. HITMAN32

    So many negative comments, some people need to calm down… its either they have lots of money to waste on the ever-increasing costs of RM and Z or their loyalty lie with them due to some association.The top and bottom of it is, OTM are offering agents something in return for a commitment and an alternative to RM and Z at a reasonable and affordable price, the commitment from OTM is not to increase fees, whereas a duopoly would only go in one direction and that’s to increase fees year on year. Ask yourself the question, what have RM and Z done for you since you signed up with them. You may say that’s where you get your business from. Well if you support OTM you will get the same from them and wouldn’t need the other two portals.Let’s see what you think in the future when RM increase their prices as promised to the Minimum of £2500 per branch.I personally don’t need RM or Z, I’ve managed without them for almost 3 years, if like me you have a good business model then I’m sure you would to. I’m committed to OTM, if everyone got behind them then everyone would be better off.It’s easy to hide behind a synonym, bleating on and making assumptions I see so many of the same names on these forums that it does beg to think how much work some of you really have.

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  17. GPL

    Baaaaaaaaaah

    “It’s easy to hide behind a synonym”?

    It is HITMAN32? ……your addressed mail must look kinda funny when you are using your real name “HITMAN32” …..thankfully not some silly psuedosillysynoname?

    Dear Mr, Ms, Mrs, Lord ……HITMAN32

    Have a Good Weekend, I’m off to round up my sheep.

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  18. Paul H

    Interesting to see how this pans out now….no doubt OTM will go to the stock market looking to offer a strong investment, with some agents tied in for 2 (more) years, some for 5 years and some for less.

    I’ve not been around long enough but would be interested to know if RM & Z also had agents tied in for 2-5 years and with an interest in the portal(main share holders) when they went to AIP and how did this affect their share price?I suspect that the more agents that now sign up and the length of their contract will have a huge influence on the share price.

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  19. londoneye

    Given that so many voted it seems only to ‘get their money back‘, I really wonder how many are really going to renew their contract once they can walk away. I guess quite a lot. How many agents really think we need a third portal?

    The view from the City is not encouraging for OTM and therefore I think this whole thing with have difficulty gaining traction. Now they are going to drop the OOP rule it will interesting to see how many other agents join.

    The directors may have won this first battle, but IMHO they are going to lose the war. People voted the way they did  as there was no Plan B.

    RM and Z are too big and powerful and have far more money. OTM was a total failure from the start, hence these changes.

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  20. harry hood

    Nobody seems to have stopped to ask who, or which fund manager would actually put their money into this with a view of making a return. Out of every stock in the world, why would they choose this?

     

     

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    1. GPL

      The lure of money Harry… don’t kid yourself… if all the purpyoeasyoov listers can attract money…. then forgive me, even though I disagree with the OTM Direction… they will raise money? …mind you, at what cost?

      Bedtime now….. IS & Co will be dreaming in £ Signs… and they may well wake up with enough of them to dream on into the near future.

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