Miller Homes shelves plan to float

Miller Homes has shelved plans to float on the London stock market, blaming volatility in the financial markets.

The announcement this morning comes just over a week after Miller Homes announced its plan for an initial public offering on the stock market, which was expected this month.

Miller had said last week (23 September) that the float was expected to raise around £140m and would entail selling off at least 40% of the company on the open market.

But this morning the housebuilder said: “In light of the recent financial markets volatility, the shareholders of Miller Group have elected not to proceed at this time with a public offering of Miller Homes. 

“The shareholders are excited to support Miller Homes in its next phase of growth as the company builds upon the momentum evidenced in its recent operational and financial results.

The move follows increasing signs that the housing market is cooling, with housebuilder Crest Nicholson among many recently to say that the surge in sales seen last year at the launch of Help to Buy had faded into a more usual seasonal pattern of demand.

Analysts said Miller’s change of heart may have been due to failing to get a strong valuation of the business from potential investors.

Kevin Cammack, analyst, Cenkos, said: “The feed-back I’m getting is that whilst appetite for housebuilders has been muted – surely that cannot be a surprise to anyone since the early summer basically – Miller failed to get the valuation debate anywhere above a straight discount to peers.”

Tony Williams, founder of analyst Building Value, said the decision to shelve the float was “dumb, dumb, dumb” and that it would have damaged investor confidence preventing the firm from floating for “at least a year”.

“They [Miller] will have spent a lot of money that they won’t get back,” he said.

A spokesperson for the company declined to put a figure on the cost of preparing for the aborted flotation, and said that no formal marketing with potential investors had taken place since the announcement of the intention to float.

Miller sold its construction business to Galliford Try in an £16.6m in July, in a move that was interpreted as paving the way for the firm to float its housebuilding business. However, the Miller spokesperson denied the sale was linked to the flotation.

Last week Chris Endsor, chief executive of Miller Homes, said the flotation of the firm was aimed at driving “strong and sustainable growth” and to ensure the firm can benefit from a “continued recovery” in its regional markets.

He added: “It is an excellent time to be operating in the housebuilding sector, with demand for new housing continuing to grow supported by improving macroeconomic conditions and mortgage market and a more favourable planning environment.

“We are proud of what we have achieved so far and look forward to developing our business and creating value for our new stakeholders as a publicly listed company.”