Builder Countryside plans return to London stock market

By Esha Vaish

(Reuters) - British property developer Countryside Properties Plc plans to raise about 114 million pounds ($164 million) through an initial public offering, returning to the London market after more than a decade in private hands.

The offering is likely to value Countryside at about 1 billion pounds, said an industry source, who asked not to be identified.

Countryside, backed by private equity firm Oaktree Capital Management, said on Thursday it would use the IPO proceeds to reduce debt and accelerate development at several sites in Britain.

The listing, expected in February, follows a strong year for UK housebuilders, which have benefited from a steady rise in house prices and surging demand, partly due to government measures that make it easier to secure a mortgage.

The homebuilders index surged nearly 29 percent in 2015, whereas the FTSE 100 (.FTSE) fell about 5 percent.

Persimmon Plc (PSN.L) and Berkeley Group Holdings Plc (BKGH.L) hit a record high, while Taylor Wimpey Plc (TW.L) and Barratt Developments Plc (BDEV.L) touched their highest since the 2008 housing bust.

More growth is expected this year as economists predict that prices will keep rising and brokerages expect order books to grow. Both Barratt and Taylor Wimpey have expressed confidence for the year.

As well as building on its own land, Countryside works with local authorities to develop public sector land - a business that analysts say could give the company an edge over rivals as Britain sets aside more funds for regeneration projects.

Property firm Savills estimates that 480,000 additional houses can be built on 8,5000 hectares of public-sector land in London - one way to start addressing the annual shortage of around 50,000 homes in the capital.

Countryside said it would use about 50 million pounds from the offering to speed up development of its sites in Acton, Beaulieu, Hazel End and Rayleigh.

The company said it expected a minimum free float of about 25 percent after the IPO.

A vehicle controlled by Oaktree, some management members and employees will also sell a portion of their stake. The company declined to estimate its valuation.

Countryside, founded by chartered surveyor Alan Cherry in 1958, traded as a public company from 1972 to 2005. In 2013, Oaktree bought a controlling stake in the company from Lloyds Banking Group (LLOY.L).

Countryside said it was targeting a 30 percent payout ratio - making it attractive to investors.

Housebuilders offer some of the strongest dividends in the UK market and often top it up with special payouts. The sector is moving towards a 35 percent payout ratio, according to data firm Markit.

(Reporting by Esha Vaish and Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair, Robin Paxton and Saumyadeb Chakrabarty)