Rightmove under pressure as activist investor takes £250m stake

An activist investor has bough a near £250m stake in Rightmove, piling fresh pressure on the embattled property giant.

London-based Independent Franchise Partners (IFP) has built up a 5.8pc stake in the house-buying portal in recent weeks, becoming Rightmove’s third-biggest shareholder.

The investment was made after the company warned its profit growth will slow next year because of investment in AI. That announcement wiped £1bn off Rightmove’s market value.

IFP has in the past led activist campaigns against the likes of Japanese brewer Kirin – unsuccessfully pushing it to spin-off its non-beer assets – and is preparing to push for change at cosmetics company Shiseido.

The investment group is also one of the largest independent shareholders in Rupert Murdoch’s News Corp and Fox Corp. IFP publicly spoke out against plans for the two to recombine in 2022.

Founded in 2009 by a group of former Morgan Stanley employees, IFP has around $22bn (£16bn) in assets under management. It describes its approach as one that focuses on generating “attractive long-term returns” for clients “with a strong capital preservation bias”. IFP declined to comment.

IFP’s link to the Murdoch media empire is likely to reignite speculation that Rightmove could be a takeover target. Last year the property website rejected a £6.2bn takeover approach from REA Group, an Australian online property company owned by Mr Murdoch’s News Corp.

At the time it rejected the bid, Rightmove argued that it “materially” undervalued the business, pointing to “long-term growth and returns”.

But the £4bn company is now reeling from a dramatic slump in share prices, with stocks plunging by just over 30pc in the past six months.

Anthony Codling, an analyst at RBC Capital Markets, said: “If nothing changes with the share price, you could understand why [investors] might think [bids would return].”

Rightmove’s grip on Britain’s property market makes it an attractive asset. It is the biggest property listings website in the UK by site traffic and property numbers, garnering more than 80pc of all time spent by consumers on property portals. The FTSE 100 company advertises one million UK homes every month.

However, investors have lately become concerned about the potential threat posed by AI. Chatbots could reinvent the way people hunt for houses, allowing people to ask for tailored listings.

Rightmove sought to counter the threat by unveiling plans to spend £60m on AI last month, including launching automated valuations, new conversational searches and visualisation tools. Johan Svanstrom, its chief executive, said AI was becoming “absolutely central” to its strategy.

But the announcement sent shares in the company tumbling after Rightmove said the investment would take three years to pay off, affecting profits until 2028.

The heavy spending comes against a backdrop of a subdued property market, with buyers and sellers reluctant to commit ahead of last month’s Budget and now facing uncertainty ahead of the introduction of a new council tax surcharge in 2028.

Rightmove also faces the threat of a £1bn lawsuit from estate agents who claim it abused its market dominance to charge “unfair” prices, backed by the litigation funding arm of US activist Elliott. The property portal has said it is “confident in the value we provide to our partners”.

Since August, Rightmove has lost £2.3bn of value. Giles Thorne, of Jefferies, said: “The more any share price goes down, by definition, the higher the probability an activist comes in.

“It’s just the rules of the game because they’ll see grounds for management to take some kind of strategic action that would push the share price up.”

Mr Codling said: “I would argue Rightmove’s management should focus just on running the business to the best of their ability and let the share price take care of itself.”

Rightmove has been contacted for comment.

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