Star fund manager Neil Woodford has put more money into Purplebricks, the estate agency which operates a hybrid model.
Woodford Investment Management has now raised its stake in Purplebricks to more than 25% by backing a private funding round which Sky News says values the company at over £100m. The value of the Purplebricks business has now soared five-fold in under a year.
Woodford’s investment is the second he has made in Purplebricks, having put in £7m last August which secured him a 30% stake in the company on its valuation at that time of £21m.
Purplebricks is the brainchild of brothers Michael and Kenny Bruce, who ran Burchell Edwards in the midlands before its sale in 2011 to Connells.
Other high-profile backers of Purplebricks include former Wonga boss Errol Damelin, and Paul Pindar, who was in charge of Capita.
Last autumn, Woodford said of Purplebricks that the company had “the vision, the technology and an experienced management team. With the funding at its disposal, I see a significant opportunity for the business to lead the market in changing the way we buy and sell houses.
“Given that the vast majority of property searches take place on the internet, a business that provides a ‘virtual’ offering without expensive high street offices can significantly undercut the current market.”
Purplebricks, which launched in April 2014, is said to be considering a stock market float next year. The business began by charging £599 including VAT, but a few months later charged £665 plus VAT. Its site now quotes £798.
At around the time of Woodford’s first investment, the firm was reported by Citywire to be targeting 85,413 instructions for the financial year ending July 31, 2015, and 100,849, representing 10% of all sales, for the following financial year.
The Sky News report is here
Comments (20)
Funny thing this budget / upfront thing, first they all take the customers cash upfront, I assume they put it in their bank and get all fuzzy that they don’t have huge rents to pay with any of it, don’t have expensive staff, no flash cars, no news paper advertising, no sponsoring local events and charities, presumably no business rates, no printing costs…….all good stuff and disruptive etc, but they seem to need cash poured into them at levels that could keep a large heard of elephants with a massive coke habit happy. – Jonnie
Jonnie – your wit and wisdom has been sorely missed in recent weeks!!
The last time i read a story as good as this it was written by J R R Tolkien. We have had no effect whatsoever in our area from PB and quite frankly I don’t believe we will. We have our finger very much on the pulse in our market area and the public don’t really make mention of it aside to say they have seen an advert! I respect Neil Woodfords made a lot of money by shrewd investment but i really think he has little understanding of our business from the ground floor and how it really works at the coal face.
One thing is for sure…….there will be a small handful of online agents that “make it” just the same as eventually we ended up with 2 main portals (pre otm). I think that it wont be long before PB look at either buying other online agents or selling out to a competitor.
The reason why so much cash is pouring into this part of the sector is that, sometime in the future, a few companies will run the majority of sales transactions from a national, online platform, and everyone involved is striving to become the next “rightmove”
It will work and it will make money for investors however, it doesn’t mean the actual business has any credibility! Look at Rightmove, yes it makes around 80 million profit but it had a stock market valuation at 2 billion, I’m no mathematician but it doesn’t add up!
STOCK MARKET or GAMBLING, its all the same! People will invest, PB will become a household name, it will never make enough money to be even worth 10 million but it will provide a return for those interested – FALSE ECONOMY ECONOMICS
How many hours does it take to sell a property? Surely even Mr Woodford can work the hourly rate and determine it’s questionable. Agree with other comments that it simply a money making exercise. Until it is no longer. Musical chairs spring to mind.
I’m not suggesting Purplebricks will work…but I don’t think you can describe anyone with Woodford’s track record or personal fortune as ‘dim, gullible or happily exploitable’. I think complacency about this model and this company in particular would be a mistake.
I agree with you, I think we all have to be mindful that things have changed a bit over the last couple of years and previous attempts by tesco and some other company that tried (they had orange boards, I cant remember what they were called) failed but rightmove at the time didnt let online agents on their site.
Another reason why we should all be on onthemarket so that we take back control. Other than that we will all have to have an online alternative to run alongside our existing models to head them all off at the pass. If we offered both services then the likes of PB would fold pretty quickly in the face of local competition.
I also agree that at least preparing a shrink wrapped online, low cost alternative brand to run alongside your high street model would be a prudent way to go…I am yet to persuade my peers of such though.
Isn’t that what Countrywide are looking at?
Yes it is. I see it merely as sensible future-proofing.
Please don’t fall into that trap. As soon as one agent in a town offers it they all will. Suddenly we will not be estate agents we will be listers.
If you go round a member of the public’s house and say here is version A for a few hundred pounds and here is version B for a few thousand you will find a lot of them will say “Well lets see what happens with version A we can always change in the future”
Have a back up plan but really make it you last resort.
A back up plan is all I’m talking about. And you wouldn’t pitch both businesses to the same client unless the same client calls both businesses out. I think that generally they would serve two very different clients wanting two very different services. We know that most still prefer a total service from a reputable high street agent and are prepared to pay a fair price for such. However there is also (and likely to grow) a number of sellers who mainly just want to be listed on the portals and have the offer negotiated for them, at a lower cost. The Daily Mail (spit) still sell newspapers but also have a website in the top 10 most visited and as such will survive. Many titles too slow to adapt will simply fold. There is clearly room for at least 2 successful agency models so why shouldn’t you look at owning/running both?
No he’s not Ric; he is the decoy to concince the sheep it is is safe. If he he grazing there can’t be a wolf in the field.
“Who wouldn’t want a lavish investor with money to burn and fame to boot? High-profile investors (HPIs) can potentially throw millions your way and bring the kind of recognition a new start-up could only dream of. However, some HPIs have more money than sense. While it’s often difficult to say no to an investment, it’s important to know the difference between good and bad investments.
One major benefit of a HPI is that more investors tend to follow their lead. We’ve all seen Dragons’ Den when one Dragon gets behind the product, the others follow because they don’t want to miss out. “They’re like sheep,” says Michael Bruce, CEO of Purple Bricks, the online estate agents. “High-profile investors are more frightened of losing out on a deal than losing money; when they see something that’s good they all pile onto it,” adds Bruce”
A hundred million – Talk about throwing your money away!
In my area we have been up against PB more so in the last couple of months than before but when you explain the difference between this type of agent and what you can offer in contrast we have won 90% of the business. Of the 10% we’ve got it back most after a couple of months when nothing happened with PB. I think they are, like all online agents, working on the assumption that if you throw enough mud at the wall…..
Service, service, service is my mantra and the difference in fees in my part of the world and PB is fairly negligible anyway. Good luck city slickers!!
£100m eh? (Wonder what that values my little tiny empire at?) That’s a big thump when it hits the buffers. £798 is great when you sell quickly every time but how many £798’s do you need to support a TV ad programme of those proportions?
12 months ago they were crowing they would be turning out £25,000,000 profit with 2 years, one really does have to wonder why any additional investment is necessary at all if the business plan in on track.
Don’t be mislead by the commission, that is a loss leader for getting their hands on retail opportunities. If you understand how small changes in other retail service sectors are affecting those industries it becomes obvious where the £100,000,000 comes from.
“stock market pros tend to think of private investors as a little like sheep: dim, gullible, happily exploitable herbivores.
Take a shufty at the bulletin boards of financial websites — Advfn, iii or London South East, any will do — and, if you don’t laugh yourself an aneurysm, you’ll start to see why.
It’s all there. The fruit-loop, wide-eyed credulity about whatever’s being puffed as the next nailed-on ten-bagger by the snake oil salesmen in the small-cap brokers. The anger and disbelief when they then get carried out feet first……….”
I read about this, get a big name to pour cash into a project and greedy sheep will pour in their own cash because they are more afraid of missing out than losing money.
Baaaah! a fool and their money :rolleyes: