Online estate agent Purplebricks has announced its entry into the German market as it takes a joint stake in Berlin-based rival Homeday with digital publishing house Axel Springer.
The company, which also confirmed on Monday that trading was in line with the board's expectations for the current full year, has entered into a joint venture with Axel Springer to purchase a 25.9% stake in Homeday for €12.7m (11.1m).
The JV will have the option to acquire up to a further aggregate 28.5% in Homeday next August, and subject to certain performance criteria being met, existing Homeday investors and founders will have an option to require the JV to make such an investment.
The Homeday management team, led by chief executive officer founder Steffen Wicker, will continue to run the business under the Homeday brand, while Purplebricks and Axel Springer will each have a seat on the board.
Launched in 2015 by CEO Steffen Wicker, Homeday operates homeday.de, a transaction-based digital real estate agency platform in Germany that helps customers to buy or sell real estate. The Homeday model has some similarities to Purplebricks, combining a technology platform with an expanding number of local agents, referred to as 'realtors', operating across 65 German residential markets including Berlin, Hamburg, Munich and Cologne.
For the year to the end of December 2017, the business had revenues of €3.5m and a loss of €3.2m. Homeday anticipates strong revenue growth in 2018 and has budgeted that it will break even in 2021.
Purplebricks CEO Michael Bruce 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.”
The company also gave a brief update on trading, confirming that it continues to trade in line with the guidance issued in July.
Trading in the UK is showing double-digit growth year-on-year in monthly instructions, with further market share gains, in what continues to be a “challenging” market. Purplebricks' share of the UK online market remains above 70%.
Meanwhile, the Canadian business Duproprio/Comfree, acquired in July, is performing “strongly”. Progress in the US remains on track and following the recent expansion into Florida, Purplebricks is now operating across seven states, within one year of launching in the country.
Purplebricks added that the recent changes made to its customer proposition in Australia to address the current challenges in the local property market appear to be have been well received.
At 1300 BST, the shares were down 4.1% to 209p.