Share prices for the investment sales firm Marcus & Millichap, which completed an initial public offering at the start of the month, have increased 19 percent since they started trading.
The company sold 6.9 million shares at $12 per share in its IPO, which completed on Nov. 5. Yesterday, the shares were trading at $14.20 on the New York Stock Exchange.
After expenses, the offering raised $34.6 million for the firm, which reported a net income of $7.3 million in the third quarter this year.
So far, the firm has only said that it plans to use the new capital for “general corporate purposes, including capital expenditures and working capital to expand our markets and services and potential acquisition of real estate businesses or companies.ˮ At the time of the IPO, however, it said it had no specific acquisition agreements.
Marcus & Millichap executives are barred from speaking about the offering during the 40-day “quite period” after its completion.
The firm employs more than 1,100 investment sales and financing professionals in 73 offices across the country, and in 2012 it closed more than 6,100 sales and financing transactions with total volume of approximately $22 billion. It was founded in 1971 by George M. Marcus and William A. Millichap.
The IPO comes at a time when brokerages are competing in an increasingly global market, where full-service real estate firms, which offer a range of management services in addition to brokerage and financing, are increasingly dominating the real estate landscape.
Marcus & Millichap’s services focus primarily on the private client segment, consisting of transactions with prices under $10 million, which the firm says comprises over 80 percent of the total number of property transactions in the commercial real estate market in the United States.
The company’s IPO overview suggests that this focus on providing transactional support to smaller, non-institutional investors will give it an advantage over its more diversified competition.
“Our business model is unique from our national competitors, who focus primarily on the institutional real estate segment, and from our local and regional competitors, who lack a broad national platform. As the leading investment sales and financing firm in the private client market segment, we believe we are ideally positioned to capture significant growth opportunities.”
