Purplebricks has bought a stake in a three-year old and loss-making German hybrid estate agency called Homeday.de for £11.1m, marking its first move into the European property market.
Homeday changed its model recently from a service that provided leads to estate agents to a fully-fledged hybrid agency in its own right with local experts. Last year Homeday posted revenues of £3.5 million but a loss of £3.2 million.
Purplebricks has taken a stake in the company via a joint venture with German media giant Axel Springer.
It will give the two companies a 25.9% stake in the Berlin-based hybrid agency, with an option to buy a further 28.5% stake in it next year. This will cost Purplebricks at additional £17.5 million to acquire.
The two companies will then have options to buy Homeday’s remaining shares and, if all goes well, will own the whole company by 2024.
Homeday will not be going purple and will continue to be run by founder and CEO Steffen Wicker and his management team.
Both Purplebricks and Axel Springer will have positions on its board.
The German market is worth €5.1 billion in sales commission, helped by the high commission rates charged by traditional agents of nearly 6%, an opportunity that Purplebricks believes Homeday can make inroads into with its lower fees.
“Our investment in Homeday secures for us a strong foothold in Europe’s second largest residential real estate market,” says Michael Bruce, the Group CEO of Purplebricks.
“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.”