London estate agent Foxtons has said it hopes to raise £22 million after the company was forced to furlough 750 employees.
The business, which also has 350 staff working from home, said that “the vast majority” of furloughed workers are on 80% of their usual pay.
Foxtons said it would raise £22 million from shareholders by flogging an early 20% stake in the business. It has already maxed out its revolving loan, bosses said.
“The London property market has been severely disrupted by the necessary measures the country has taken to contain the Covid-19 pandemic,” said chief executive Nic Budden.
“Prior to the lockdown, Foxtons’ trading in 2020 had been in line with the board’s expectations and we started the year in a strong financial position, with a cash balance of over £15 million and no external borrowings and a growing sales commission pipeline.”
The business said that revenue from its letting arm had dropped by 5% to £13.9 million in the first three months of the year, with sales flat at £7.1 million.
Overall, therefore, revenue fell by 3% to £23 million as both supply and demand were hit by the country going into lockdown to slow the spread of coronavirus.
However, despite early signs, it is too early to forecast the exact impact that the lockdown might have on performance.
All Foxton’s branches are closed.
Mr Budden said that the fundraising came during an “extremely challenging period”.
He added: “Notwithstanding our current strong financial position, the board considers it prudent to raise additional capital at this time to enable the company to maintain liquidity in a reasonable worst-case scenario and preserve vital business capability to support customers when the Covid-19 pandemic subsides.”