Talk about making a killing from the housing market.
Alex Chesterman, the founder of Zoopla, will walk away with £61m following a £2.2bn takeover of the property website’s parent company, ZPG, by the US private equity firm Silver Lake.
It has been a lucrative adventure for the economics graduate.
He received an estimated £27.5m when Zoopla floated on the stock market in June 2014.
He sold a further £11m worth of shares in August the following year and raised another £13.8m when he further reduced his shareholding in September 2016.
The pay-out confirmed on Friday values Mr Chesterman’s current shareholding in the business at £22m but, in addition, he has share options that, when crystallised, take the total to £61m.
Mr Chesterman has also been paid £4.5m during the last four years.
And all this on top of the £6m he received when LoveFilm, the DVD rental business he helped set up, was bought by Amazon in 2009.
Image: Alex Chesterman also founded DVD rental business LoveFilm before selling it to Amazon
However, by far the biggest winner from the takeover is the Daily Mail & General Trust, which is expected to receive £640m for its shareholding on top of the £182m it received at the time of Zoopla’s flotation.
Despite its name, DMGT makes far more money these days from non-publishing activities, such as events organising and data provision and analysis, than it does from publishing the UK’s second best-selling daily and Sunday newspapers, the Daily Mail and Mail on Sunday.
It has long been active in the field of online property, having bought an online property search business called Sitescope as long ago as 2003, which it followed a year later with the acquisition of Findaproperty.
In 2006, it bought PrimeLocation for £458m, making it the second largest player in the sector.
Zoopla has also grown via acquisitions as well as organically.
In July 2009 it bought ThinkProperty from Guardian Media Group and, a month later, bought Propertyfinder.com and Hotproperty.com from News International, the then-publisher of The Sun, The Times and The Sunday Times.
Other property websites it has swallowed over the years include Houseprices.co.uk in January 2011 and, in May 2012, Upmystreet.com.
In July 2012, the final pieces of the jigsaw came together when Zoopla merged with DMGT’s property website assets, with DMGT emerging with 55% of the enlarged business.
Since coming to market, ZPG has continued to acquire businesses, including the comparison website uSwitch, bought for £190m in May 2015, and housing data specialist Hometrack, snapped up for £120m in January last year.
Yet life as the head of a listed company has not always proved agreeable for Mr Chesterman who, after graduating from University College London, turned down a job with Wall Street banking giant Goldman Sachs to work for the Planet Hollywood restaurant chain.
Nearly one-third of ZPG’s shareholders revolted in January this year against an incentive scheme under which Mr Chesterman stood to make £62m over four years if the company hit certain performance targets.
To put that sum into context, ZPG’s pre-tax profits in 2017 were just £37.4m, although that partly reflects the scale of acquisitions in which the company has been involved.
More than a quarter of shareholders also voted down the remuneration report for 2017, during which Mr Chesterman collected some £1.7m in salary, bonuses and incentives.
Image: OnTheMarket was founded to challenge Zoopla and RightMove
While Zoopla has been something of a “Marmite” stock, for some investors, the takeover by Silver Lake will provoke mixed feelings.
British tech companies are frequently accused of selling out to larger rivals, usually from the US, before they have reached their full potential.
ZPG has, over the years, attracted comment about how it could become the “Amazon of housing”.
After years of investment and buying up rivals, the benefits of that expansion will now be reaped by American investors, who are admittedly paying a full price for the business.
Yet UK investors can still get exposure to the sector via Rightmove, ZPG’s larger rival, whose shares shot up by 5% on news of the takeover – valuing it at £4.1bn.
There’s also the smaller OnTheMarket, floated in February this year, which is valued at £84m.
It was launched by a group of estate agents, including Savills, Chestertons and Knight Frank in 2015 as a mutual in response to what they saw as Zoopla and Rightmove’s duopoly and sought to challenge the pair by insisting that agents listing with it could only list with one of the others.
Zoopla, as the smaller of the pair, was expected to lose out the most.
Mr Chesterman – who helped bankroll the court case that obliged the Government to hold a parliamentary vote on triggering Brexit via Article 50 – was dismissive of OnTheMarket from the moment it launched.
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But it looks as if it is here to stay.
Unlike, sadly, Zoopla’s status as a British-owned tech company that offered much promise.