DMGT set for cash injection from Zoopla listing

Holding a 51% stake in Zoopla, as it looks to progress with a £1 billion IPO, will ensure the financial security of the Daily Mail General Trust for some time to come.

The Daily Mail has, for the last 5 years, become an increasingly odd beast as its business operations have two distinct arms. The hard copy paper that represents the morally outraged middle England, while the online version of the paper is happier offering a wide variety of photos of the latest celebrity beach holidays. The hard copy paper has found life increasingly difficult as a selection of free papers has, in recent times, flooded the market and inevitably seen reader numbers drop. In contrast the online newspaper is the most read paper online, beating even the New York Times into second place.

There have been a number of papers such as The Sun and The Times that, in order to supplement their dwindling hard copy sales, have felt the need to start charging for online viewers. Because of the number of Daily Mail viewers, the revenue it has been able to derive from advertisers has meant that this has not been an issue forced upon them.

The icing on the cake, as far as DMGT is concerned, comes from its 51% stake in the online property website Zoopla. Later on this week we shall see the details of Zoopla’s proposed IPO which is expected to raise £1 billion. DMGT has already stated that it will retain a large holding in the company.

The fundamentals of this company paint an attractive picture but the performance of the shares in 2014 have been somewhat less impressive. Having fallen from a February high of 1077p it now sits just above 800p. The last six weeks have seen the shares dip below this 800p level twice, and on both occasions buyers have come in. It is likely that with the markets appetite for IPO’s and the state of the UK’s housing market DMGT will see a premium being added to whatever holding they maintain in Zoopla, and I would look for the shares to once again ultimately head towards year highs.

Daily Mail chart

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