In a bold move that underscores confidence in the capital's property sector, the private equity backers of London's biggest estate agency chain are exploring a sale that could value the business at more than half a billion pounds. This comes despite the impending threat of Chancellor Rachel Reeves's new 'mansion tax'.
The £500m+ Sale Process Begins
Oakley Capital, which acquired a majority stake in Dexters in 2021, is close to appointing investment bankers to evaluate options for cashing in on its investment. Banking sources indicate that Barclays is being lined up to advise on the potential sale, although a formal mandate may not yet be in place. The process is described as being at a very preliminary stage, with no firm decisions on timing or structure.
However, insiders suggest that a valuation of between £500m and £600m is considered realistic. If achieved, this would make Dexters worth significantly more than its listed rival, Foxtons, which currently has a market capitalisation of approximately £175m.
Dexters: A London Powerhouse
Founded in 1993 by Jeff Doble, Dexters has grown into a dominant force with scores of offices across London, including around 40 in the central zone. The company is now run by CEO Andy Shepherd and chaired by retail veteran Justin King, the former boss of J Sainsbury.
Its financial performance has been robust. For the year to 30 September 2024, Dexters London reported an underlying operating profit of more than £47m, up from just over £40m the previous year. Revenue hit nearly £222m, driven by acquisitions and growing market share, with lettings accounting for close to two-thirds of total income.
Oakley Capital's initial £130m investment in 2021 provided a war chest for expansion, enabling Dexters to snap up rivals like Marsh & Parsons and LiFE Residential. The private equity firm, headed by Peter Dubens, is understood to own a roughly 60% stake in the business.
Navigating Market Headwinds
The exploration of a sale arrives during a period of uncertainty for the UK housing market. Nationwide data showed house prices across the country rose by just 0.6% last year, with London seeing a 0.7% rise in the final quarter. The sector also faces the looming spectre of policy change, with Chancellor Rachel Reeves confirming plans for a 'mansion tax' on homes worth over £2m just six weeks ago, with the recurring levy set to start in 2028.
Estate agency groups have generally had a tough time on the public markets, exemplified by Countrywide's £130m takeover by Connells in 2021 following profit warnings. Nevertheless, the potential Dexters sale indicates strong investor appetite for well-performing, scaled operations in the lettings-heavy London market.
This follows news that another major UK agency group, LRG, hired Rothschild to explore an £800m sale several months ago, suggesting a wave of consolidation and investment activity in the sector.
Both Oakley Capital and Dexters have declined to comment on the sale speculation.
