Fusion Corporate Partners

Announcement of Intention to Float on the London Stock Exchange

Zoopla Property Group Plc (the “Company” and together with its subsidiaries, “ZPG”, or “the Group”) today announces its intention to proceed with an initial public offering (the “IPO” or the “Offer”). The Company intends to apply for admission of its ordinary shares (“Shares”) to the premium listing segment of the Official List of the UK Listing Authority (“UKLA”) and to trading on the main market of the London Stock Exchange (“LSE”) (together, “Admission”). The Offer will comprise an offer of Shares to institutional investors (the “Institutional Offer”) and to the Group’s eligible members (the “Member Offer”).

ZPG is an established digital media business operating in the broader UK property market by providing property search and research services to consumers and property marketing and data services to property professionals (estate agents, letting agents and new home developers).

The Group owns and operates a number of leading UK online property portals with a portfolio of brands. These portals provide consumers with the resources to search for property and research the property market, and property professionals with a platform on which to market their listings and connect with consumers. The Group’s own brands include Zoopla, PrimeLocation, SmartNewHomes and HomesOverseas and the Group also powers the property search function for a number of leading third-party websites and mobile applications in the UK.

Alex Chesterman, Founder & Chief Executive Officer of Zoopla Property Group said: “We are delighted to be bringing ZPG to market following a number of years of strong growth and having built a market-leading proposition for both our users and members (being estate agents, letting agents and new home developers). In addition, we are excited to be able to offer the opportunity to our members to participate in the Offer and become shareholders in the business as part of this process.“

“In 2008 we set out to provide consumers with the most useful online property resources and to be the most effective partner for property professionals in the UK. Today, with over 40 million visits per month to our websites and mobile applications, generating over 2 million enquiries every month for our members, ZPG has become an indispensable link in the property search process for consumers and the property marketing process for professionals across the UK.“

“We have built strong and trusted brands with high engagement levels across our platform as a result of our passion for innovation and differentiation and our mission of becoming the consumer champion in the UK property market. I am very proud of what the team has achieved to date and we are incredibly excited about the opportunities ahead to continue to grow our brands and business. We’re confident about our future as we embark on the next stage of our development as a public company on the London Stock Exchange.“

The Group is also pleased to announce the appointments of Mike Evans as Non-Executive Chairman, in addition to Duncan Tatton-Brown as senior independent director and Sherry Coutu as a non-executive director to the Board of ZPG (see Board Biographies below).

Commenting on the recent Board appointments, Alex Chesterman said: “I am delighted to welcome Mike, Duncan and Sherry to the Board of Zoopla Property Group. The fact that we have attracted Non-Executive Directors of their calibre is testament to the strength of our business. I am looking forward to working closely with each of them and utilising their insight and experience which will be incredibly valuable as we move into life as a public company.“

Mike Evans, Non-Executive Chairman of Zoopla Property Group said: “I am very excited to be joining Zoopla Property Group as Chairman. Alex and his experienced team have built a very impressive business with a proven track record of delivering exceptional financial results and are passionate about continuing to innovate and grow the ZPG brands in a sustainable way by focusing on generating further value for both its members and consumers. I look forward to working with the other Board members and the management team as we take ZPG through its next phase of development in the public market.“

Business Highlights

A leading market position in an industry with high barriers to success for new entrants

• ZPG has reached strong market penetration levels – approximately 90 per cent of the total inventory of residential property listings from property professionals in the UK, with approximately 19,000 subscribing members
• In the half year ended 31^st March 2014, the Group attracted an average of approximately 40 million visits per month to the Group’s websites and mobile applications
• Strong brand awareness – the Zoopla brand enjoys 76 per cent prompted national brand awareness in the UK according to a recent brand survey conducted by Harris Interactive
• Long-term strategic relationships with many of the leading property professionals in the UK
• Exclusive distribution partnerships with some of the leading media businesses in the UK

Proven track record of innovation and differentiation

• Provides users with unique features and content to empower them and provide valuable insights into the UK residential property market
• A superior user experience with compelling functionality and rich data
• Through continued product development and innovation, the Group has become a key destination of choice for property consumers and a marketing platform of choice for property professionals in the UK
• ZPG has accumulated a significant database of information on over 28 million residential properties across the UK, enhanced by proprietary user-generated content on over 9 million UK homes and continues to build one of the most valuable datasets on the UK residential property market

Compelling member proposition

• Provides members with valuable tools and services to enable them to market their listings and win more business
• Subscription services provide compelling value and a strong return on investment for members
• Member tools allow property professionals to track, manage and communicate real time with transaction-ready users, helping to measure and quantify the value created by the Group’s leads
• Well-positioned to create additional value for the Group’s growing member base and grow revenues in the future
• Strong growth, high margin recurring subscription-based model with excellent cash generation
• Strong top-line growth underpinned by a superior value proposition offered to members
• Revenue is principally comprised of subscription fees charged to members on a monthly basis representing c. 86 per cent of total revenues in the year ended 30 September 2013
• Business model characterised by a high profit margin and low capital expenditure requirements, leading to exceptional operating cash conversion of approximately 100 per cent for the year ended 30 September 2013
• Entrepreneurial management team with exceptional proven experience
• Agile and lean management structure, ensuring that the senior management team remains close to its members, users and their colleagues
• Senior management team has a track record of delivering cost-effective organic growth and successfully integrating acquisitions within a short timeframe

Growth Prospects

The Group has a number of strategic priorities to continue driving growth in the business, including:

• Delivery of its core strategy of providing superior value to members and increasing membership to the platform
• Launching additional products and services for its members
• Leveraging its strong brands and platform within other areas of the property sector including the commercial and overseas property markets
• Utilising its proprietary dataset to enhance its products and services and monetising such data by providing unique insights into the property market
• Providing further property-related services to its large audience of users as the consumer champion in the property market

Overview of the Offer

• The Group has a diverse shareholder base including a number of key shareholders who hold approximately 93 per cent of the Shares in the Company between them. The Offer is expected to comprise a sale of Shares held by key shareholders including DMG Media Investments, Atlas Venture Fund VII, L.P, Alex Chesterman, Countrywide Plc, LSL Property Services Plc, Connells Limited, Simon Kain and Octopus Zenith LP (together, the “Selling Shareholders”). In addition, a number of smaller shareholders are expected to sell some of their Shares in the Offer.
• The Offer comprises the sale of secondary shares only and will provide the Selling Shareholders with an opportunity for a partial realisation of their investment in the Company. The Company will not be issuing any new shares to investors or members in connection with the Offer.
• Following completion of the Offer, it is expected that the UK Listing Authority’s minimum free float requirements will be satisfied, resulting in the Company having a free float of at least 25%.
• The Offer is being made by way of:
  • the Institutional Offer by the Selling Shareholders: (i) to institutional investors in the United Kingdom and elsewhere outside the United States in reliance on Regulation S and in accordance with locally applicable laws and regulations, and (ii) in the United States, only to Qualified Institutional buyers in reliance on Rule 144A or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act of 1933; and
  • the Member Offer in the United Kingdom by certain of the Selling Shareholders to existing subscribing members (being estate agents, letting agents, new home developers and franchisors) of the Group’s services (together the “Eligible Members”). Each Eligible Member will be contacted individually to explain how to participate in the Member Offer.
• Pursuant to the Member Offer, each Eligible Member will be entitled:
  • To apply to purchase, per each branch or development advertised with ZPG, up to £2,500 worth of shares at a 20 per cent discount to the offer price (the “Offer Price”) in the IPO; and
  • the option to purchase, one year following Admission, per each branch or development, an additional amount up to the amount subscribed for at the IPO, at a 20 per cent discount to the Offer Price, provided Eligible Members remain continuing subscribing members of the Group’s services during the period up to and on exercise of the option one year after Admission.
• The Company, its Directors and the Selling Shareholders will agree to customary lock-up arrangements in respect of the issue, sale or other transfer of Shares (as applicable) for the following specified periods of time following Admission:
  • Alex Chesterman, Simon Kain, Stephen Morana, certain other members of senior management and the Board will be subject to a 365 day lock-up; and
  • the remaining Selling Shareholders and the Company will be subject to a 180 day lock-up.
• It is intended that an over-allotment option of up to 15 per cent of the total offer size will be made available by certain of the Selling Shareholders
• It is expected that Admission will take place in June 2014 and that, following Admission, the Company will be included in the FTSE UK Index Series (in the FTSE 250, with a Media super-sector classification).
• In relation to the Offer and Admission, Credit Suisse Securities (Europe) Limited (“Credit Suisse”) and Jefferies International Limited (“Jefferies”), are acting as Joint Global Co-ordinators, Joint Sponsors and Joint Bookrunners. Canaccord Genuity Limited (“Canaccord Genuity”) is acting as Co-Lead Manager.

UK, London

Related articles:

• Zoopla acquires Trinity Mirror property sites Posted on September 5, 2013
• OFT clears the merger between the Digital Property Group and Zoopla Posted on April 16, 2012
• FindaProperty, Primelocation and Zoopla to merge to take on Rightmove Posted on November 7, 2011
• Zoopla acquires Houseprices.co.uk Posted  on January 5, 2011