Martin & Co, the UK’s largest single brand residential lettings business, is pleased to announce that it will start trading on AIM before the end of the year. This Bournemouth-based company that has successfully expanded through the franchise model hopes that this move will see them take advantage of a “fragmented” but growing rental market. Martin & Co hope to raise £15-£17m from the flotation, and expects to be valued at about £30-£35m. With anticipated end-of-year 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 company is 95 per cent owned by its two founding partners – Richard Martin and Kathryn Martin while chief executive Ian Wilson owns 5 per cent. The flotation represents a part exit for the two founders, although all owners will retain a holding in the company after flotation, which is to be managed by broker Panmure Gordon.
Martin & Co 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 was 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. In 2013, Rightmove and Savills Rental Britain predicted that the number of such households would rise by 1m by 2016. “Even for people within the industry, it’s surprising the extent to which letting has mushroomed,” Mr Wilson said.
Martin & Co operates through a franchise model that offers property sales, letting and investment products where franchise owners, on lettings income alone, on average turnover £275k in year 3 and can expect to build a business value to in excess of £450k in just 5 years. Franchise owners then pay 9 per cent of revenues to the company which provides them with extensive support from the franchisor’s team at head office.
The letting market has changed over recent years with the rise of websites such as Zoopla and Rightmove. About 85 per cent of Martin & Co’s revenue comes through websites,“I think there will be consolidation in the market – it’s getting more sophisticated, you need proper training, you need digital and social media expertise,” he said. “It’s no longer enough to stick an advert in the local paper.”
Richard Martin, one of Martin & Co’s founders, is naturally very positive about the move. “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.”
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