Value of online conveyancing service jumps after AIM launch

In-Deed, the online conveyancing service launched by Rightmove's founder Harry Hill, was launched on the stock market last week with a share price of 42 pence.

By Friday the share price had risen to 58p, before falling back to 56.5p as Solicitors Journal went to press.

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. The listing document also states 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, if he were to die or become incapacitated, the company's prospects would be damaged.