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.