Purplebricks drops on UK warning despite Axel Springer stake
German publisher to invest about £125m for 11.5% stake
Axel Springer’s investment will be used to enter new markets.
Purplebricks said on Monday German publisher Axel Springer has invested about £125 million for a 11.5 per cent stake in the British online real estate agent, which is looking to expand in the United States.
Shares in Purplebricks fell as much as 10 per cent to 280 pence on the London Stock Exchange. Purplebricks is led by Co Antrim brothers Michael and Kenny Bruce, who were new entrants on The Sunday Times Rich List, published on Sunday, with a net worth of about 216 million.
The company said Axel Springer’s investment, which included a £100 million subscription for new shares, would also be used to enter new markets and widen Purplebricks’ service offering.
Purplebricks ventured into the United States last year - its third market after Britain and Australia - by launching operations in Los Angeles. In 2018, it moved into San Diego, Sacramento and Fresno.
The company said in January it planned to enter the New York market in the second quarter of fiscal 2018.
In Britain, Purplebricks and other online estate agents have challenged traditional operators such as Countrywide and Foxtons, which are struggling as the market cools due to uncertainties in the wake of Brexit.
However, Purplebricks warned its group revenues for the year ending April 30 would be around 5 per cent lower than its consensus of £98 million due to weak market conditions in the UK, which has been worsened by poor weather.
Both Australia and the United States are on course to at least meet its full-year revenue expectations, the company said.