Purplebricks breaks into European market with multi-million pound German deal

Britain’s biggest online estate agent is moving into Europe for the first time by acquiring a stake in its most prominent German counterpart.

The Solihull-based property group has become a shareholder in Homeday through a joint venture, called NewCo, with the German media giant Axel Springer.

NewCo has conditionally agreed to a first round investment which wil lgive it a shareholding of 25.9% in Homeday, including an existing 4% stake brought in by Axel Springer and Newco a valuation of €25.4m (£22.3m), equating to an investment of €12.7m (£11.1m) by Purplebricks, which will be funded from existing cash resources, for a 12.9% shareholding in Homeday.

Purplebricks and Axel Springer, via NewCo, will have an option to acquire up to a further aggregate 28.5% in Homeday in August 2019.

The Homeday management team, led by CEO and founder Steffen Wicker, will continue to run the business under the Homeday brand, with the added support and expertise of both Axel Springer and Purplebricks.

For the year to the end of December 2017, Homeday, which launched in 2015, reported revenues of €3.5m and a loss of €3.2m.  As at 30 June 2018, Homeday had net liabilities of €1.4m. Homeday said it anticipates strong revenue growth in 2018 and has budgeted that it will breakeven in 2021.

The deal is the latest overseas expansion announced by Purplebricks, which in July bought DuProprio, a Canadian real estate company, and its English language subsidiary, ComFree, for almost £30m –  a deal made possible by a £100m investment by Axel Springer announced in March.

The group has expanded into Australia and is now rolling out launches in the USA.

The company continues to push ahead with its international growth strategy as it deals with losses arising from heavy investment in marketing and brand awareness.

Purplebricks has invested heavily in marketing, pumping 46% of its revenues last year on promoting the brand. It recorded an EBITDA loss of £19.6m for the group in the year to April.

Michael Bruce, group CEO of Purplebricks, said: “Our investment in Homeday secures for us a strong foothold in Europe’s second largest residential real estate market. This is a good opportunity for Purplebricks, allowing us to partner early with a dynamic and committed management team, while remaining focused on realising the opportunity in our existing markets.

“Steffen Wicker and his colleagues at Homeday share many of our own values and have a clear ambition to become Germany’s leading online real estate agent by providing a trusted and transparent service to customers. We are confident that with the combined support of Purplebricks and Axel Springer the Homeday management team will help to transform the German market, and in the process deliver exceptional value for customers and shareholders.

“I am pleased to report that we continue to perform in line with our expectations and make further gains in market share despite what are challenging market conditions in the UK real estate sector.”

Wicker, CEO and co-founder of Homeday, added: “The combination of Purplebricks and Axel Springer as partners in our business is compelling.  The three-way knowledge share will benefit all parties. We now have the funding and the backing to be a decisive player in the German property market.”

 

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