OnTheMarket is buying a 20% stake in proptech firm Glanty, which operates letting agency software teclet, with plans to buy the rest of the company.

The initial 20% stake in Glanty will cost OTM £797,000.

Both OTM and Glanty are currently loss-making.

Teclet, designed for the lettings sector, was launched in 2016 and plans to break even in 2021.

OTM, which also believes it could break even in 2021, has an option to acquire the other 80% of Glanty in an earn-out arrangement.

That would involve an initial £1.5m, and OTM would have to pay off loans of up to £1.4m.

There would be a potentially deferred consideration of up to £12m in cash and shares.

The option is exercisable over 15 months. If not taken up, OTM could sell back its 20% stake.

Teclet, aimed at helping letting agents with compliance, will be offered to OTM agents.

Teclet has announced inroads into the lettings industry, notably in a deal with Hunters.

The teclet deal comes as OTM also announced a dilution of its shares, raising £3.4m (£3m after expenses) at 70p a share.

Application was made for the 4,857,143 placing shares of £0.002 each to be admitted to trading on AIM, with admission on December 30.

This new money will finance the initial costs of the Glanty teclet acquisition, while helping to improve OTM’s own balance sheet.

The announcement of both OTM’s latest fund-raise and the purchase of its 20% stake in Glanty was made shortly before Christmas.

OTM also said at the time that it is continuing to make progress in converting and signing up agents to paying contracts.

Glanty’s directors include well known industry figure Mike Day, appointed just over a year ago.

Unusually, there was no press release from either teclet or OTM, although EYE has approached both companies for comment.

It is understood that talks are planned over the next couple of weeks which could result in a further announcement.