Hybrid estate agency, Purplebricks has announced that it has entered into a joint venture with Axel Springer to enter the German market and jointly take a stake in online estate agent, Homeday.
Purplebricks and Axel Springer have entered into a joint venture, named NewCo, where the deal will initially be split 50/50, in order to jointly acquire a stake in Homeday.
NewCo has conditionally agreed to a first round investment which will give it a shareholding of 25.9% in Homeday (including an existing 4% stake brought in by Axel Springer) and Newco a valuation of £22.3m, equating to an investment of £11.1m by Purplebricks, which will be funded from existing cash resources, for an effective 12.9% shareholding in Homeday.
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.
Purplebricks and Axel Springer will each have a seat on the Homeday board, effective from completion of the first round of investment in Homeday.
Purplebricks believes that the combination of Homeday’s experienced and committed team, together with Axel Springer’s presence in and knowledge of the media market in Germany, and Purplebricks’ own operational and technology platform expertise, will significantly strengthen Homeday’s growth potential.
Although the online market in Germany is still small, it is a fast-growing market and Homeday has developed rapidly to become the market leader in just 4 years, achieving close to 50% market share of the online space. Purplebricks will contribute its increasing knowledge and experience of building online businesses in different international markets with a particular focus on optimising the customer experience, building Homeday’s marketing impact and refining its technology platform to best effect.
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.”