Hybrid agent Purplebricks has raised funds through a share issue to help the company break into the US market and launch Purplebricks USA.
The funding move raised £50 million pounds via AIM by offering shares at £2.20 each, just under its current share price of £2.26p, which rose by 2.1% during late trading yesterday. The placing was over subscribed and raised several million more than Purplebricks had sought.
The company says the cash will be used to set up operations in several key US states during the second half of 2017, and estimates the potential commission cake in the US is approximately $70 billion or £56 billion.
The move into America follows Purplebricks’ entry into the Australian market in August last year in Melbourne and Brisbane, which by October it had deemed to be a “great success”. The company currently has 437 properties for sale on its Australian website, up from less than a 100 in October.
But unlike in Australia, where the estate agency business is very similar to the UK one, in the US properties are sold in a way that could suit the Purplebricks model as many realtors there are self-employed.
“We are confident that with our understanding of the US market and our experience from having already launched in two markets Purplebricks can build a significant business in what could be one of the most fascinating and rewarding real estate markets in the world,” says Purplebricks CEO Michael Bruce.
“For the realtors we recruit Purplebricks presents an exciting new platform to build scalable, profitable businesses in their own dedicated regions, supported by our strong technology infrastructure and marketing reach.
“For US customers, we are seeking to offer a better deal in selling and buying their homes, with a more convenient, transparent and cost effective service.”