By Esha Vaish
(Reuters) - British lettings agent MartinCo Plc (L:MCOM) could buy a private rival with a strong brand name this year, for which it would spend a minimum of about 1 million pounds, the company's chief executive said.
MartinCo, the fourth-largest lettings and estate agency company in the UK, will scout nationally for a lettings agent with at least five to six offices, the company's CEO Ian Wilson told Reuters.
"We're an acquisitive business. The radar is always up and we believe that the model of a central hub running multiple franchise brands is a good model," said Wilson.
Larger estate and lettings agents in Britain have been driving consolidation in the country's crowded residential rental market, keen to grab a bigger chunk of the booming sector as a shortage of houses pushes more Britons to rent.
Investors, too, are backing a push into lettings because it is less cyclical and provides greater surety of earnings than the lucrative, but riskier, business of brokering house sales.
Acquisition opportunities are abundant.
UK has over 25,000 estate agents servicing the nearly 1.3 trillion-pound private rental market and no single agent has more than a single-digit stake of the pie.
The number of private rented homes in UK has risen 28.3 percent since 2010, to almost 5.7 million, according to property consultant Savills Plc (L:SVS).
Countrywide Plc (L:CWD), the country's biggest lettings and estate agency company, bought 30 lettings businesses last year, as did LSL Property Services Plc (L:LSL). MartinCo bought none.
Bournemouth-based MartinCo managed 45,000 tenanted properties at the end of last year, operating from 287 offices stretching from Falmouth to Inverness. It plans to manage 50,000 properties by the end of 2016.
The company had 4.3 million pounds in cash at the end of 2015, with about 3 million pounds of its debt facility undrawn.
Apart from potentially buying a branded business, MartinCo plans to spend another 1 million pounds to bring 10 smaller agents under its franchise umbrella this year, Wilson said.
Wilson said he expects each such franchise deal to add 300,000 pounds in revenue and 250,000 pounds in management service fees.
MartinCo reported revenue of 7.1 million pounds last year and fees of 6.2 million pounds.
Up to Friday's close of 150.50 pence, its stock has gained about 50 percent since it listed on London's Alternative Investment Market on Dec. 18, 2013.