UPDATE 1-Foxtons share sale oversubscribed - source
By Tom Bill
LONDON, Sept 10 (Reuters) - The planned stock market flotation of real estate agent Foxtons is over-subscribed, a source close to the process said, indicating interest in the offering may be outweighing any concerns that the London property market is looking overheated.
The flotation of the London-focused group, due to happen later this month, has a price range of between 190 pence and 230p, which would give it a stock market value of between 550 million pounds ($864.6 million) and 650 million.
The source declined to give any indication on Tuesday of the price at which bids for Foxtons shares had been submitted.
Foxtons is the latest housing-related company to undertake an initial public stock offering (IPO) on the back of Britain's recovering housing market.
Yet some investors argue the housing market in London may run out of steam and the company is arriving late to a party that began when UK-wide estate agent Countrywide and housebuilder Crest Nicholson floated earlier this year.
"We took a big holding in Countrywide, a very big holding, and we also own a lot of LSL," said Derek Mitchell, senior UK equities manager at Royal London Asset Management, referring to its 3.2 percent stake in Countrywide and holding in property agency LSL Property Services.
"Foxtons gives you exposure to London. But arguably that story has already happened, the story is now outside London."
Foxtons and its private equity owner BC Partners declined comment.
HELP TO BUY
House prices fell by 16.3 percent in London after the financial crash and by 16.6 percent across England and Wales, according to Land Registry data. While London prices have recovered to 6 percent above their pre-crash peak, in the rest of the country they are still 10 percent below.
Though the British government has put housing centre-stage in its battle to spark economic recovery with its Help to Buy scheme, it is more likely to boost the market outside London because prices in the capital are too high even with such help, said analyst Anthony Codling at brokerage Jefferies.
The head of UK equities at a large British investment manager said: "Foxtons is a genuine 'Marmite' stock", referring to the sandwich spread whose advertising campaign boasts of its divisive salty taste.
Some draw a parallel with the housing market in the United States, where new home sales slid 13.4 percent in July to their lowest levels in nine months, hurt by rising mortgage rates and casting a shadow over the country's housing recovery.
The trend may make it hard to sell Foxtons stock on the other side of the Atlantic, where appetite was strong for Countrywide at the start of the year before the negative sales statistics.
"If you go back (to North America) with Foxtons, which is what they are all doing, the Americans are saying 'our sector's rolled over, your sector's rolled over'. I'm not sure they're going to be so keen," said the head of UK equities.
Established in 1981, the company has offices that resemble bars and a fleet of branded Mini Coopers. Many investors like the company's brash image, said Alastair Stewart, an analyst at Progressive Research.
"What's clear from the early days was their sales strength," he said. "They are what you could call 'naughty but nice'."
BC Partners bought Foxtons from founder Jon Hunt for about 360 million pounds ($566 million) in May 2007, four months before the sub-prime mortgage crisis bit in Britain when mortgage lender Northern Rock ran into financial trouble.
The company's proposed flotation range represents a price-to-earnings multiple of between 15 and 18 times, based on 2014 forecasts, versus a 16.5 multiple for Countrywide, according to Thomson Reuters data.
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