3i sets sights on Britain’s largest estate agent

The private equity firm wants to move into the residential property sector by backing Countrywide management in a buyout worth up to £900m.

Private equity group 3i is working with Countrywide managing director Harry Hill and other members of the management team on a potential takeover bid for the British estate agent.

In a statement to the London Stock Exchange, 3i Investments said it expects to approach the company with an offer shortly.

The news sent shares soaring 10 percent, valuing the company at £880 million ($1.6 billion).

Countrywide operates 1,100 estate agents and owns a 21.5 percent stake in the online residential property site, Rightmove.

It is split into four divisions: estate agency, financial services, residential surveying and valuation, and residential conveyancing.

The company generated first-half pretax profit of £62.8 million, an 18-fold increase from the prior year, boosted by asset disposals. Nevertheless, Countrywide’s shares tumbled seven percent just weeks ago when the government said it was watering down plans for the introduction of Home Information Packs.

3i, Europe’s biggest quoted private equity firm, has recently shown an interest in the real estate sector. Last month it made its first foray into the property markets by investing $40 million in an India-focused real estate venture capital firm.

Its bid for Countrywide comes amid growing interest by private equity firms in Britain’s residential property sector.

Last week, a consortium comprising the Bank of Scotland, Sir Tom Hunter’s West Coast Capital and the Reuben brothers sealed a £1.1 billion  takeover of Britain’s biggest retirement homes builder, McCarthy & Stone.

It beat off Permira and Barclays Capital to the deal.