Buoyant London market to see Foxtons go for flotation

The company, which trades from about 40 offices in and around the capital, plans to raise £55m through an offer of new shares in a flotation expected to value it between £400m and £500m.

Private equity owner BC Partners will sell some of its stake, while directors are also expected to earn a windfall of up to £100m.

Foxtons is capitalising on a buoyant London market, inflated by demand from cash-rich foreign buyers and Government stimulus schemes such as Help to Buy.

A successful flotation would mark a substantial turnaround in fortunes for BC Partners, which also owns mobile phone retailer Phones4U.

BC Partners bought Foxtons for about £375m at the peak of the market in May 2007 from founder Jon Hunt, just months before the credit crunch sent house prices plunging – a purchase it described as a “mistake”.

The company was taken over by its lenders in 2010 in a deal which slashed its debt, before the private equity firm regained control last year.

It made underlying earnings of £38.3m last year on revenues of £120m. Underlying profits in the first six months of this year were up 14.3 per cent on a year earlier to £19.4m, while revenues rose 10.5 per cent to £62.6m.

Foxtons said it is well placed to benefit from any improvement in the housing market.

It said: “The limited geographical area of London and in particular its prime residential areas, combined with low levels of house building in London and planning restrictions on new building or redevelopment of property, have led to a constraint on the supply of residential properties in London and created excess demand which has resulted in resilient prices.”

Foxtons plans to open five to 10 new branches a year between 2014 and 2018, and could also expand in the South East in the longer term.

Its first branch opened in 1982.