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In-Deed's market value jumps to £11.23m on AIM launch

15 June 2011

In-Deed, the conveyancing service launched by Rightmove’s founder Harry Hill, launched on the stock market this morning with a share price of 42 pence.

By midday share price had risen 31 per cent to 55 pence, valuing the company at £11.23m.

The company placed 3,771,426 ordinary shares on the AIM market, or 18.49 per cent of its enlarged issued share capital, giving the company an opening market capitalisation of £8.57m.

Current directors have retained 22.35 per cent of the capital, with the rest being owned by private and institutional investors.

In a statement In-Deed, which is floating as ‘In-Deed Online’, said it was aiming to become “a market leader in the highly fragmented £1bn conveyancing market within three years”.

At present the company has three full-time employees. Its IPO document said it was looking to grow to nine by September 2011.

In-Deed has estimated the current value of the conveyancing market at £1.3bn, based on an average transaction worth £500.

The company says transactions are running “well below” the 2010 average of 884,000 and its directors “are not forecasting a material recovery in volumes within their plans”.

They nonetheless believe that “historic evidence… would suggest there is potential for growth in the market”, according to the prospectus.

The admission document also reveals that the company already has it eyes on the will-writing and personal injury markets.

“The distribution of conveyancing service is the company’s core focus,” it says. “However, the directors believe that the In-Deed brand and the website has the potential to expand so as to offer access to business-to-consumer legal services and the directors intend to explore will writing as a priority before considering personal accident and other products.”

Among the strengths of the company’s business model is scalability, according to the document, with operations focused mainly on marketing, technology and management of the law firms’ panel, resulting in a low fixed costs base.

It also lists “leading technology”, the track record of its management team in the property sector, and the future growth prospects of the conveyancing market.

With customer acquisition acknowledged as “the key revenue driver”, marketing of the service will represent a major development effort.

It was already known Phil Spencer had been contracted for 12 months to be the “face and voice” of the service. Today’s listing document also details In-Deed has secured an exclusive 18-month advertising contract with the Digital Property Group, part of the Daily Mail group, which runs the Findaproperty, Primelocation, and Globrix websites.

While the company is being launched in parts at least to take advantage of the Legal Services Act, it also recognises that the opening up of the sector as a result of the Act could undermine its business model as competitors – including law firms – take advantage of the liberalisation of the market.

The company’s founder, Harry Hill, is also seen as essential to its success and that if he were to die or become incapacitated, the company’s prospects would be damaged.

In-Deed: who owns what

Public (AIM): 18.49 per cent

Directors: 22.35 per cent

Other investors: 59.16 per cent

Who’s who

Directors:

Harry Hill, executive chairman: former CEO of Countrywide plc for 20 years until 2008, where he founded Rightmove plc and set up Countrywide Property Lawyers to take advantage of conveyancing referrals from within the estate agency chain. His current directorships include Jupiter Second Split Trust plc and JKM Property Solutions (UK) Limited (a privately owned property development company). Hill owns 8.33 per cent of the share capital and is to receive £70,000 p.a. under a new service agreement with the company.

Peter Gordon, Managing Director: former 3i Group executive (1989-1998) and partner (200-2008), where he managed Legal Marketing Services, the then UK market leader in the supply of re-mortgage legals. Currently MD and part-time also finance director until a full-time FD is recruited. Gordon owns 8.33 per cent of the share capital and will earn £70,000 p.a. under a service agreement with the company.

Philip Williamson, non-executive director: former chief executive of the Nationwide Building Society (2002-2007) and previously chairman of the Council of UK Mortgage Lenders (2000-2001). Williamson owns 0.29 per cent of the share capital and will receive a £20,000 fee p.a. in return for giving the company a minimum of two days per quarter.

Boris Zhilin, non-executive director: the Russian national is a former senior executive Bear Stearns in New York (1995-1999) in investment banking and private equity. Currently a principal at Armor Capital, a US-based investment management firm he co-founded in 1999. Zhilin owns 5.4 per cent of the shares and will receive a £20,000 fee p.a. in return for giving the company a minimum of two days per quarter.

Senior management team

Craig Smiley, technology director: educated in New Zealand, Smiley has 12 years’ experience in IT consulting and project management, including work at Merill Lynch, GSK and the BBC.

Julie Williams, legal services director: Williams has been in the conveyancing sector for 29 years, including Countrywide Property Lawyers where she was a manager (2000-2011) responsible for the teams of conveyancers and all of CPL’s panel operations.

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Discrimination Conveyancing