OnTheMarket creates 'better outcome' facility for IPO agents to exit

OnTheMarket has written to agents who backed the portal at its 2018 initial public offering to provide a “better outcome” if they wish to sell their shares once the lock-in period ends in February.

At the time of the IPO, agent shareholders were restricted from selling their shares for five years and that lock-in period ends on 9 February 2023.

Agents have been sent letters from OnTheMarket chief executive Jason Tebb, stating that while it is hoped that they remain as shareholders, they may not get the best value if selling their stake on the open market and should use a proposed share dealing facility it has created instead.

Tebb said in the letter: “The average number of shares traded each day over the 30 dealing day period between 27 October 2022 and 7 December 2022 was 18,222 shares and, on 12 dealing days within such period, no shares were traded at all.

“Therefore, it is possible that everyday market share purchasing demand may be insufficient to optimise share sales if these were to come from a range of sellers and at a variety of different times.”

Instead, OnTheMarket has created a facility for a one-off sale, without which it is claimed that “the market price achievable by selling agent shareholders may be impacted.”

Tebb added: “Indeed, the buying demand required to facilitate sales in the open market may be insufficient to allow sales to be completed at all.”

Entitled agent shareholders wishing to sell their shares will be able to deposit them with a dematerialised custody service called the OTM Corporate Sponsored Nominee (OTM CSN).

The shares are still owned by the agent, but the agents will be able to opt to have their shares put up for sale in a one-off placing anticipated to be carried out in February 2023.

The idea is that the placing will look to identify buying demand to match aggregate selling demand and achieve the best result for selling shareholders.

If the shares don't sell they can stay within the CSN and belong to the agent who can ask Link to try and sell them later on their behalf, or they can hold them or they can transfer them out of the CSN if they wish.

Tebb said at the end of the letter: “We are hopeful that you will continue to support your portal and remain as a shareholder after February 2023.

“We firmly believe this is in your and our mutual interest. But if you do choose to sell any shares, we strongly encourage you to participate in the OTM CSN and Placing arrangements.”