Not since lastminute.com came to the stock market in 2000 has there been
anything quite like it. Seven years after 200,000 small investors were left
nursing losses in that overhyped flotation, another dot-com is trundling
down a flotation slipway aimed at private punters.
Moneysupermarket.com, advised by Credit Suisse, is wooing the millions of
visitors who browse its price comparison websites. If all goes to plan, it
will float on the London Stock Exchange in the next two weeks with a
valuation of about £940 million.
Lastminute, of course, came to be seen as the high water mark of the
technology bubble, but Simon Nixon, co-founder and majority shareholder of
moneysupermarket, is unfazed by the comparison. He is emphatic that users of
his websites should have the chance to invest in the business. “People
recommended very hard that we should not do a retail offering, that it was a
hassle and a waste of money, but I was determined.”
Online registrations from the public have been coming in strongly, he says,
but he won’t give any figures. Meanwhile, he has embarked on a whistle-stop
roadshow of Western financial centres to drum up interest from institutional
investors.
A successful flotation would be a great coup for Mr Nixon, the working-class
son of an RAF sergeant who dropped out of his accounting and finance degree
at Nottingham University 20 years ago to become a freelance mortgage broker.
It would also make him very rich. If the shares sell at the mid-point of the
indicative price range, he will make £114 million in cash and will still be
holding a 57 per cent controlling stake in the business worth £536 million.
Mr Nixon, who celebrates his fortieth birthday next month, is candid that the
float is partly to allow him and his senior colleagues to cash out. There
are “lock-in” restrictions ensuring that management maintains an interest in
the business, but the share issue will make dozens of people at the top of
the business very rich. The millionaire count in the Flintshire district of
Ewloe in North Wales, is about to go through the roof.
Yet Mr Nixon argues that a flotation will also enable moneysupermarket to
recruit more easily, it will raise the profile of the business and it will
position it to make acquisitions: “We’ve never done deals before, but that
doesn’t mean to say we don’t want to do deals going forward.”
The company is the biggest player in price comparison websites, an industry
that until recently could not have existed. It relies entirely on the fact
that millions of British households are linked to the internet. It offers 25
websites, helping consumers to find suitable home insurance, credit cards,
mortgages, flights, utility providers and even broadband suppliers. Users
key in their needs and moneysupermarket comes up with possible products,
usually ranked by price. It makes its revenues from product suppliers who
pay up on a “per click” basis.
The business evolved out of an earlier company, Mortgage 2000, a website
giving mortgage brokers up-to-date information on hundreds of different home
loans. Mortgage 2000 in turn evolved from a magazine, Brokers Update, which
Mr Nixon launched from his bedroom using little more than a Mac computer.
Brokers Update was no glossy magazine — little more than a few pages of black
and white photocopied prices and terms — but it proved to be an instant
success. Mr Nixon sent free copies to brokers alongside an £11-a-month
standing order form — and got a 10 per cent response rate — incredibly high
by industry standards. “There was nothing like it,” Mr Nixon recalls. “I
filled a niche, basically.”
The popularity of price comparison websites is indisputable.
Moneysupermarket’s sites boasted 64 million visits last year and 523 million
page impressions. As a method of browsing the market, they have no equal. Mr
Nixon was able to pay himself a £15 million bonus out of profits last year.
However, they are not quite the pure consumer champions that they like to
portray themselves as. They are entirely financed by the industry, of
course, which sees them as a cost-effective way of winkling out customer
leads. Royal Bank of Scotland and its insurance units Directline, Churchill
and Privilege Insurance all refuse to deal with moneysupermarket and other
such sites, going so far as to spell out their shortcomings in television
advertising. Mr Nixon counters that moneysupermarket is making huge efforts
to help consumers, running consumer forums on its website and offering an
“ask the expert” service. He also points out that some suppliers that make
no payments to the company are included in its rankings: “Ryanair and
easyJet don’t pay us anything, but they’re on our site.”
In some cases, the tail is starting to wag the dog. Suppliers are designing
products to ensure that they appear at the top of the price rankings. Some
insurance is offered for very low premiums, but with particularly adverse
terms, such as exclusions. Yet there is no doubt that moneysupermarket can
be a useful tool for consumers looking to whittle down hundreds of choices
into a manageable shortlist — and with only 15 per cent of adults so far
buying any financial product online, the growth prospects are considerable,
Mr Nixon says.
His main task is to convince prospective investors that the barriers to entry
are such that moneysupermarket can maintain its dominant market position.
Tesco is rumoured to be considering an insurance price comparision website,
other rival sites are using blanket television advertising to stamp their
name into the national consciousness, but moneysupermarket boasts that 57
per cent of adults in the UK know its brand and thus is keeping its name in
lights. A successful flotation may make it shine even more brightly.
C.V.
Born: August 7, 1967
Education: Sir Richard Gwyn Roman Catholic High School, Flint, North
Wales; Nottingham University (dropped out of accounting course after two
years)
Career: 1987-89: mortgage broker, Lawrentian Life; 1989-present:
enterpreneur, launching Brokers Update magazine, Mortgage 2000 and then
moneysupermarket.com
Lives: Chester
Interests: Travel, water-skiiing, cooking, squash
The leader questioned
If you could change one thing in the financial and commercial environment,
what would it be?
We have never built a product or service we wouldn’t be fully confident of
recommending to friends and family. If it wasn’t transparent and of genuine
benefit, there’s no longevity in the business. I don’t think this is true of
quite a lot of businesses.
What does leadership mean?
I see my role as ensuring that I hire — and retain — people who are expert in
their own areas. This business has grown and seen off challenges from
competitors by having a first-class management team. I see it as fundamental
to our success to keep hiring top people as we expand and retain the quality
people who have brought us thus far.
Which businessman or woman do you most admire?
If I had to pick one, I think it would have to be Terry Leahy. His philosophy
is always driven by listening to customers. That’s a strategy we’re most
passionate about.
Who is or was your mentor?
I haven’t been close to a particular business mentor, but I’ve learnt a lot
from observing Sir Richard Branson in the way he built the Virgin brand;
Stuart Rose, of Marks & Spencer, and the way he made sure he was fully
in touch with his competitors and customers; and I think the guys who set up
Google have been hugely inspirational. More recently, I’ve enjoyed getting
to know my chairman, Gerald Corbett, who brings an understanding of the City
which would take me years to attain.
Which is more important, what you know or who you know?
Both are essential. You need to know your business and technology, which is
the “what you know”, but the “who you know” is your customers.
Moneysupermarket.com doesn’t function without knowing both the “what” and
“who” in equal measures.
Does money motivate you?
I can’t pretend that I haven’t enjoyed getting to where we are today. Where we
are today has allowed me to be financially secure for a number of years. But
what really drives me is my desire to build the best online comparison
business in the world.
What’s the most important business event, good or bad, to happen in your
working life?
That’s easy: the day Freeserve launched free dial-up internet access. I
realised that the internet would become a very readily available consumer
resource, and that this was a great opportunity for us.
What gadget must you have?
My juicer. I’m quite into a healthy diet and a key ingredient is my fresh
juice in the morning.
How do you relax?
I play a lot of sport, I love to cook and, when I have any free time, I like
to travel.
