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LATEST: Leading Purplebricks’ shareholder offloads its stock

The unexpected sell-off signals City jitters about riskier investment opportunities like Purplebricks in the current climate.

Nigel Lewis

purplebricks

City investment firm ToscaFund has offloaded all its shares in Purplebricks in a move that strongly suggests weakening investor confidence in the hybrid estate agency and wider industry.

Prior to Friday the investment fund held 9.8% of all Purplebricks Group Plc shares, although the City wasn’t told until late yesterday about the sell-off.

The fund’s interest in the company is estimated to have been worth £35 million in January when Purplebricks share price was riding relatively high at £1.17p, but on Friday would have been worth just £11.2 million.

ToscaFund’s decision highlights the fast-moving nature of the stock market at the moment, as well as Purplebricks difficult position as it consumes its remaining cash reserves while waiting for the Coronavirus pandemic to pass.

Over the past 11 months ToscaFund has spent million increasing its holding in Purplebricks, making it – until now – one of the most significant shareholders in the agency.

City shares discussions platforms have been buzzing with speculation about why ToscaFund has ditched the shares, including that many City investors are worried that agents both large and small will not survive a prolonged lockdown.

As The Negotiator reported in February, industry commentator Andrew Stanton looked into Purplebricks published accounts and predicted that the company was in a race to preserve its cash pile, something its CEO Vic Darvey strongly denied, saying its continuing operations in the UK and Canada were profitable.

But the Coronavirus crisis means, like most other agents, it has seen a dramatic reduction in turnover in recent weeks.

April 7, 2020

2 comments

  1. How long can a dream of keeping an online estate agency model stay afloat? It takes money from clients upfront, retains this money without having to be accountable for any sales results. As long as the public kept supporting it and then then from the investment side, risk taking investors continued to see a future in it, there was alway an open cheque book for its vision.

    There is though, only so much money you can pump into a flawed business model of online estate agency and one has to question the ethics of how it gains its revenue.

    So maybe, at long last, the risk-taking public and also higher-risk-taking investors are not just starting to, but actually now smelling the coffee!

  2. This company has always used its low fees and USP of no commission as why you should use them. Fact a low fee is a high fee if they don’t sell the property. The salesman (negotiators) are paid for new instructions. What motivation do they have to sell? Very little.

    PB has had millions pumped into it… and the share price keeps falling… Can’t see this business being around for much longer.

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