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Optimism in the UK estate agency sector

The news that US distressed investor specialist Oaktree is close to signing a deal for a 35% share of UK estate agency chain Countrywide has given some investors in the sector food for thought. The company was acquired for over £1 billion during the height of the UK property boom although it is rumoured that Oaktree would be investing just £75 million of fresh equity for a 35% stake. However, as part of the deal the company's debt will be slashed from £750 million to just £175 million.

The deal has not yet been concluded as at least 75% of Countrywide's bondholders must approve the scheme but with no alternative on the table Oaktree is very confident the deal will go through. Countrywide was one of the leading UK estate agents during the property boom although US private equity firm Apollo has lost a significant amount on its £1 billion takeover as the market turned against them.

The company has recently announced a number of redundancies as the UK property market continues to head lower. Whether this is actually the bottom of the UK property market cycle very much remains to be seen and there are risks in investing in the UK estate agency market in the current environment.

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