Zoopla valued at $1.56bn following flotation

Startups 100-listed property website Zoopla joined a select group of billion-dollar UK tech businesses after investors backed its $1.56bn Initial Public Offering (IPO) valuation ahead of its admission to the London Stock Exchange next Monday.

Founded by Alex Chesterman and Simon Kain in 2008, the two-time Startups 100-listed company was founded with the intention of becoming the most comprehensive source of residential property information in the UK, offering free instant value estimates on every UK home and enabling buyers to express an interest in any property listed on its online platform.

Zoopla’s flotation on the London Stock Exchange caps a remarkable story of growth for the business, which turned over £64m in 2013 and receives more than 40 million visits a month to its website. It has risen to dominate its competition, acquiring all but one of its direct competitors across six years of existence.

The company has continued to see sustained double-digit growth in recent months, growing revenues 26% in the six months to the end of March 2014.

It priced shares in its company at 220p a share – putting its valuation at £919m($1.56bn) overall – which rose 5.5% to 232p a share during early trading on Wednesday morning, indicating that the property company will see a successful flotation when unconditional trading begins next week.

The valuation and subsequent display of investor confidence in Zoopla has bucked the trend of waning investor interest in high-profile IPOs and allayed concerns over a potential housing bubble as property prices continue to boom.

Daily Mail and General Trust (DGMT), the newspaper group which owns 52% of Zoopla, is in line for a £177m windfall following the flotation as it sells 19% of its holding in the company.

Founder Alex Chesterman’s own 8% stake in Zoopla was valued at £73m, and he has made £32m from the sale after selling 3.5% of his holding. Chesterman has said he plans to hold on to the remaining stake for at least a year.

The flotation is likely to mark another success story for the tech entrepreneur, who became widely known as one of the co-founders of LOVEFiLM, the online film rental business sold to Amazon in 2011 for £200m.

Tech-focused VC firm Octopus Investments was an early investor in Zoopla, and said the IPO would deliver “significant returns” for its investors. Alex Macpherson, head of the ventures team at Octopus, said: “We’re really proud to have invested in Zoopla Property Group when the business was still very young and faced numerous challenges to succeed, at a time when the property market in the UK was at its lowest ebb and the economic environment looked very poor.

“We believed in Alex and Simon from the beginning and have been thrilled to see the business grow explosively over the last six years. The flotation is testament to their vision and hard work, and we are extremely grateful to the whole team for this success. We now look forward to continuing to support the company in this exciting next stage of its development.”