Sherry FitzGerald plans sale of majority stake to private equity

Ireland’s largest estate agent, Sherry FitzGerald, has hired PwC to advise on options to secure private equity investment to help fund its growth over the next five years.

This would involve an investor taking a majority stake in the group, with its co-founder and chairman Mark FitzGerald, who owns about 50 per cent of the business, selling a large part of his holding.

Sherry FitzGerald’s chief executive, Steven McKenna, confirmed PwC’s appointment to The Irish Times, adding that Mr FitzGerald would continue to be part of the “fabric” of the business after an investor has been secured. “He’s going to be part of the future,” he said.

Mr FitzGerald will be 65 next year and stepped down as chief executive in 2017 to become chairman. Some 75 per cent of the company’s shares will be held by people aged 60 or older in 2022, although the senior leadership team has an average age of 43.

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“We are looking at investment options to support the ambitious growth strategies that we have and to accelerate that growth. We have to plan for the future,” Mr McKenna said.

Expanding its mortgage brokerage will be central to this growth strategy, with the company targeting €1 billion in home loans for house buyers by 2025 as opposed to a current run rate of €200 million a year. Mr McKenna said this would equate to an estimated 17 per cent share of the broker market at that time.

The broker unit has been underpinned by a significant investment in technology, with a new platform launched in August based around software developed by broker Karl Deeter, who is licensing the product to Sherry FitzGerald.

A new managing director for the unit, Shane Quinlan, formerly of Bank of Ireland and Danske, was recruited in the summer.

“There’s a huge opportunity there for us,” Mr McKenna said. “We’ll be able to give buyers access to all the mortgage products in the market... and can also look at their life cover, their pensions and home insurance. We have 36,000 registered buyers on Mysherryfitz and we can offer support for those buyers.”

‘Value in this business is the brand’

Sherry FitzGerald also plans to consolidate its position as the leading seller of homes in the State with it acting as the agent for a pipeline of more than 15,000 new houses to be built over the next three-four years. Mr McKenna is also interested in exploring the possibility of re-entering the British market, a decade after it sold its Marsh & Parsons business there.

Mr McKenna made clear that Sherry FitzGerald was not interested in selling to a trade buyer. “The value in this business is the brand and we’ve invested a lot in the brand, in technology and the senior management team,” he said.

Sherry FitzGerald will be 40 years old next year and has 100 offices across the State, including 70 operated by franchisees. Latest accounts show that its turnover declined by 17.5 per cent to just under €25 million in 2020.

It made an after-tax profit of just more than €1.5 million, up from €187,000 a year earlier. This was largely down to a €6.5 million reduction in payroll costs, with the company claiming €1.9 million in Covid-related wage subsidies from the State. Employee numbers reduced to 243 last year from 284 in 2019.

It had net assets of €9.9 million at the year end, and €10.5 million in cash. Warehoused tax liabilities of €4.5 million relating to Covid-19 were repaid in May 2021. No dividend was paid to shareholders while directors’ remuneration declined by almost €500,000.