Rumours are beginning to circulate in the City that major US private equity fund Francisco Partners is considering buying the UK operation of Purplebricks.
The hybrid agency’s share price spiked dramatically at the end of a volatile day of trading on the London Stock Exchange which saw its price fall by 12% to an all-time low of 88p a share before rallying and then leaping back up to £1.02p during the final minutes of trading.
Francisco Partners specialises in buying up technology-enabled services businesses and is based in San Francisco but has an office in London. It has $12 billion of funds under management.
Speculation has been rife as to what Purplebricks is going to do next after the departure of founder Michael Bruce earlier this month, and also its shock withdrawal from the Australian market.
Francisco Partners is said to be primarily interested in its profitable UK business and not the company’s remaining US operation, leaving a question mark over what would happen to Purplebricks’ recent acquisitions in Europe and North America.
These include online Canadian estate agency DuProprio – which has since rebranded as Purplebricks – and a share of German counterpart Homeday.de.
If the rumours are true then it is likely that Francisco Partners would seek to buy out the majority shareholders in Purplebricks including Neil Woodford’s investment fund which owns just shy of 30% of its stock.
This would be a welcome escape from Purplebricks for Woodford’s fund, which backed the agency in the early days but has seen its investment reduce significantly as Purplebricks’ share price has nosedived from £5.13 in August 2017 to £1.02 today.
But resistance to such a takeover is likely to come from Germany media giant Axel Springer, which last year bought shares in Purplebricks worth £100 million at £3.60 a share.