Zoopla Property Group IPO Price Range

zooplapropertyOn 22 May 2014, Zoopla Property Group announced its intention to make an IPO on the London Stock Exchange. (See previous DigiNet reporting and an overview of the offer.) DMGT intends to participate in the IPO and reduce its stake in Zoopla. DMGT currently holds a 52.6% stake in Zoopla.

The price range is set at 200 pence to 250 pence per share. The mid-point of the price range implies a market capitalisation for Zoopla of approximately £940 million. The base deal offer size is in the region of 111 million to 179 million shares, representing between 27% and 43% of Zoopla’s existing issued share capital. The Offer comprises the sale of existing shares only.

Final pricing is currently expected to be announced on or around 19 June 2014, with conditional dealings in the shares on the London Stock Exchange beginning the same day. Admission and unconditional dealings in the shares are expected to commence on or around 24 June 2014.

UK, London

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Zoopla Property Group Plc – Announcement of Intention to Float on the London Stock Exchange

zooplapropertyAnnouncement 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 31st 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

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PHSC plc to acquire QCS International

PHSC plc, the Aylesford-based provider of health, safety and environmental services to corporate and public sector clients, is to acquires QCS International Limited (QCS). The acquisition will complete on 31 July 2012.

QCS is a company incorporated in Scotland, and was established in 1987. The company specialises in quality, environmental, and health and safety management systems and assists organisations by providing practical support and training in systems such as ISO 9001, ISO 14001, OHSAS 18001 and ISO 13485.

QCS achieved adjusted operating profits of approximately £100,000 in the year to April 2011 according to unaudited management accounts that have been substantiated as part of the due diligence process. The consideration payable will be £160,000 in cash, together with the issue of 79,186 new ordinary shares in the capital of the Company at completion, £160,000 on the first anniversary and a final payment of between £40,000 and £80,000 two years after completion, subject to certain targets being achieved.

The cash and cash-equivalent net assets of QCS will be purchased £ for £ after the preparation of completion accounts. Application will be made to the London Stock Exchange for the 79,186 new ordinary shares to be admitted to trading on AIM, with admission expected to take place on 1 August 2012. Following admission of the new ordinary shares, PHSC will have a total of 10,461,159 ordinary shares in issue.

The acquisition of QCS will enable the Group to offer a number of new services. It will also help to expand the Scottish marketplace for the Group, in that QCS will be able to introduce all of the Company’s services to their existing clients.

One of the Company’s existing subsidiaries, Quality Leisure Management Limited, already has a strong client base in Scotland. While around 20 percent of QLM’s customers are in Scotland, clients are currently serviced from personnel based in England. The acquisition will enable QLM to run a satellite operation from QCS’ Scottish offices.

Rosalynne Shields, currently Commercial Director of QCS, is to become Managing Director upon completion and to remain with QCS for a minimum of two years. She will replace Mike Izon, who will resign from the board and leave the company. All other QCS personnel will stay in post, and the company will continue to operate from its leasehold premises in Cumbernauld.

UK, Aylesford & Cumberland

Pearson to sell 50% stake in FTSE to the London Stock Exchange for £450 million

Pearson has agreed to sell its 50% stake in FTSE International Limited to the London Stock Exchange Group for £450 million in cash.

FTSE is a world-leader in the creation and management of more than 200,000 equity, bond and alternative asset class indices. With offices in London, Frankfurt, Hong Kong, Beijing, Shanghai, Madrid, Milan, Mumbai, Paris, New York, San Francisco, Sydney and Tokyo, FTSE works with partners and clients in 80 countries worldwide.

Marjorie Scardino, Pearson’s chief executive, said: “FTSE is a bellwether of global financial markets and a world-class business. We have enjoyed supporting the company’s excellent and highly professional team to build the business. Proud as we are of that long association, FTSE’s strategy is different from our own. We wish it every success as we continue to build our digital business information services around the Financial Times.”

Pearson and London Stock Exchange Group currently each own 50% of FTSE. Under the terms of the agreement, London Stock Exchange Group will acquire from Pearson the 50% of FTSE that it does not own and continue to use the FTSE name. The transaction is expected to close by the first quarter of 2012.

In 2010, FTSE reported total revenues of £98.5 million and total EBITDA of £40 million. At 31 December 2010, FTSE had gross assets of £100.8m.

Pearson expects FTSE to make a total post-tax contribution to Pearson’s adjusted earnings of approximately £18 million or 2.2p per share in 2011.

The transaction follows the sale of Pearson’s stake in Interactive Data last year for $2bn. It marks Pearson’s exit from companies that are primarily providers of financial data and strengthens the FT Group’s focus on global business news, analysis and intelligence, increasingly delivered through subscription models and digital channels.

Pearson intends to use the proceeds of the sale to support and accelerate its strategy, investing in its businesses both organically and through acquisitions of companies with complementary content, technology and geographic exposure. In recent years Pearson’s organic investments have enabled it to gain share in many of its markets. The company has also made a series of bolt-on acquisitions (including vocational training companies in the UK, global business intelligence through Mergermarket, universities in South Africa, online learning businesses in North America, language schools in China and school systems in Brazil) which have rapidly enhanced Pearson’s earnings and return on invested capital.

UK, London

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