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Rumours circulate that major US equity firm considering Purplebricks purchase

Francisco Partners is thought to be looking to purchase the hybrid agency's UK business but not its US operation.

Nigel Lewis

purplebricks

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.

Woodford shares

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.

May 22, 2019

2 comments

  1. It’s amazing how naive an established private equity firm would be to purchase a dying business in all markets, including the UK. There are no valuable assets and must have junior analyst running their due diligence.

    People – talent has already exited, no leadership and Vic Darvey has no creditability in sector. USA has no one at the top and Aus is winding down
    Technology – It’s one monolithic code base. Developed by former executive team and they already cashed in with Bruce brothers. Would have to rebuild entire platform
    Brand – tarnished with the consumer, most important and competitors use all negative announcements by Purplebricks against them
    Model – revenue slowed and relies on heavy marketing spend. Unproven in down market and pressure on margins
    Enterprise Value – $0 – there is no business here

    We are shocked if a private equity firm buys this dog.

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