The Denver, Colo.-based real estate company Re/Max Holdings has filed for a $100 million Initial Public Offering (IPO) with U.S. regulators and is planning on listing its class A shares on the New York Stock Exchange under the symbol RMAX. Re/Max’s public offering, a first for the 40-year-old company, is a sign that Re/Max wants to better ride a rising U.S. housing market.
Is Re/Max a good opportunity for investors to ride the bullish trends of the United States housing market, or should investors hold back snapping up shares at Re/Max’s IPO? Based on the macroeconomic conditions of the housing market and the success of publicly listed Re/Max competitors, Re/Max could provide a great opportunity for long-term investors.
However, any valuation analysis that might come into play later would be moot at this point, since Re/Max hasn’t yet detailed the number of shares being offered and the final price of the IPO.
Re/Max’s success as a private company and opportunity to expand
Re/Max operates through a network of agents and franchises. Established in 1973 from a single office in Denver, Colo., Re/Max has grown to represent more than 92,000 real-estate agents in about 95 countries. Re/Max holds the prestigious position of being No. 1 in market share in the U.S. and Canada since 1999.
Although Re/Max does hold this No. 1 position, it has room to expand internationally, and even domestically. Re/Max has logged increasing revenue generation: It reported unaudited revenue of $143.7 million in 2012, up from $138.3 million in 2011. Based on this information, Re/Max appears to be a well-positioned leader in the real estate market for the future.
Macroeconomic factors and previous IPOs bode well for Re/Max
The U.S. housing market is currently doing quite well, which has boosted the bottom line of several public real estate companies. For example, Re/Max competitor Realogy Holdings Corp (NYSE:RLGY) and online real estate companies Zillow Inc (NASDAQ:Z) and Trulia Inc (NYSE:TRLA) have seen strong performance since going public:
Even if the housing market does sputter, more established companies like Re/Max and Realogy Holdings Corp (NYSE:RLGY) will be able to weather the storm. Realogy Holdings Corp (NYSE:RLGY) has provided an example for Re/Max in its successful $1.1 billion IPO, and the current market expansion provides room for both Re/Max and Realogy Holdings Corp (NYSE:RLGY) to grow.