Online estate agent Purplebricks Group PLC (LON:PURP) said Monday it’s entering the European market for the first time through a joint venture that is buying a stake in Homeday, a German online estate agent.
UK-based Purplebricks and digital publisher Axel Springer will jointly purchase a 25.9% stake in Homeday. The joint venture has a valuation of £22.3mln (€25.4mln), equating to an investment by Purplebricks of £11.1mln (€12.7mlm) that will be funded from existing cash resources.
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.”
In addition to other terms of the agreement, Purplebricks and Axel Springer via the joint venture will have an option to acquire up to a further 28.5% stake in Homeday in August 2019.
In March, Axel Springer bought an 11.5% stake in Purplebricks.
READ: Purplebricks receives £125mln injectio n from German digital publisher Axel Springer
Germany is one of Europe's largest residential real estate markets, said Purplebricks, with more than 600,000 annual sales transactions. Reflecting higher commission rates charged in the country, the annual sales commission income is estimated at €5.1bln, it said.
The Homeday management team, led by CEO and founder Steffen Wicker, will continue to run the business under the Homeday brand, with support from both Axel Springer and Purplebricks.
Homeday, launched in 2015, posted revenues of €3.5mln, and a loss of €3.2mln for the year ended 31 December 2017. The company anticipates strong revenue growth in 2018 and expects it will break even in 2021.
Separately, Purplebricks confirmed that trading in line with its expectations for the current full year.
“Trading in the UK is currently 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%,” the company said.