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TODAY'S OTHER NEWS

Official: Purplebricks first online agency to float, on December 17

Hybrid online estate agency Purplebricks is expected to start trading on the Stock Exchange on December 17.

It has already raised £58.1m from an institutional placing and is expected to be admitted to AIM - the Alternative Investment Market - with a market capitalisation of £240.3m.

The new investment this will attract will, the firm says, be used to “further deepen the national footprint, particularly in London and Scotland”, increase awareness of the company’s profile and brand, invest in technology and software, incentivise and attract employees and provide senior figures in the company “with a partial realisation of their investment.”

"The Purplebricks team have dedicated four and a half years to develop and establish a model which is designed to change the way we sell, buy and let residential property. We have a compelling customer proposition of a low flat fee combined with a high quality and personalised service, underpinned by our proprietary technology platform” says Michael Bruce, Purplebricks chief executive.

“The business model is disruptive and has allowed us to establish Purplebricks as a nationwide agency at a lower investment than a traditional agency, with a more flexible cost structure which supports the sustainability of our pricing strategy” he says. 

Star fund manager Neil Woodford will remain the largest shareholder following the flotation with a 28.7 per cent stake worth held by Woodford Equity Income, his business. The stake is estimated to be valued at around £73m. 

  • Chris Arnold

    Will high Street estate agencies be "quaking in their shoes" at this perceived threat? Only those low-information agents that cannot think for themselves and do not understand how to create affinity within their local area.. The decision on which agency to instruct is made on matters other than price and no matter how many millions are thrown at establishing PB as a brand, it all boils down to whether they are in it for profit, or to genuinely impact on service levels.

  • Steven Thompson

    Purple Bricks has been set up, operated and now floated for the benefit of the owners. They've constructed the site and will make their money and move on. It's up to someone else to make it a success (doubtful) or face up to the losses.

    Algarve  Investor

    Can't help but agree. Where are they getting this £240.3m valuation from?

     
  • Terence Dicks

    I agree with you Steve. A crystal ball is not needed for seeing if they go, but when.

  • Trevor Mealham

    So on investment raised. How much has it brought in from sales and lettings?

    Fake Agent

    That's what I'd like to know, Trevor. It's a similar situation to easyProperty. All these grand predictions and forecasts, but no actual substance.

    How much have Purplebricks actually made from their bread and butter, from their sales and lettings operations? Or have they just been backed all along, like with easyProperty, by a number of very rich investors and a very shrewd PR team?

    Has anyone actually sold or let a home with Purplebricks? I'm genuinely interested, to see what the service provided was like and whether this mythical 24/7 service was actually a reality.

     
  • icon

    I wonder at point point Rightmove or Zoopla will take it serious? They need to now! Has anyone realised that the two portals are the heart and lung of Purplebricks? Without them it would not succeed, but have the two portals or more importantly their 'Stock Market Shareholders' not woken to the fact if Purplebricks succeeds then the two portals will fail!!!! When I say fail, I mean income will start to drop, not tail off, but drop! Because this low cost model will hurt agents income and it is their income that is the 'Heart and Lung' off the two portals, then where does that leave Rightmove and Zoopla, or should we say their 'Shareholders.............When the market gets this then watch those two portals shares start to dive..........

  • icon

    More interesting I am sure they pay slightly more for their one "national" office to RM and Zoopla than most of us do per office, however, I am sure they are not spending per month over £1,000 per portal per location they work in, therefore it seems like completely unfair competition. What is there to stop Spicerhaart, Countrywide, Sequence etc....stating they have one national office and all the others are offshoots from their main office, that would severely impact RM and Zoopla's profits, so either the corporates finally have to do something to benefit the industry as a whole, or all agents up and down the country have to be brave and bold, and walk-out en masse from RM and Zoopla and go to On the Market (perhaps the lesser of the evils), until both the stronger portals ban the internet agents or charge them per virtual location, as then the business model will fail as they wont be able to make profits (which at the moment doesn't look like they do anyway).

  • Christian Woodhouse

    Interesting thoughts Daniel but I don't think its worth speculating on the price the On-line Agents pay to the portals because they may pay more than. I can't see OTM doing a u-turn on the allowing On-line Agents on their portal either.

    In my opinion, what its worth (probably not a lot), the high street agents are scared because they can't predict which way its going to go and as it stands at the moment the On-line agents are selling/letting properties and that will only increase. The questions are by how much and how fast will it grow?

    Terence Dicks

    Not even concerned about the online agents, let alone scared. Decent high street agents will always be here. Not sure about the online agents though.

     
    Joshua Offer

    I'm not worried in the slightest by their 'rise'. I haven't directly sold or let through Purple Bricks but I have been involved with quite a few chains with them. My experience is this: If you have the perfect house, your paperwork is absolutely spot on, no other part of the chain has any questions and you are happy to do a lot of the work yourself then they work fine.

    99% of the time their back office and sales progression is so poor that many people wish they hadn't bothered in the first place. Their cheap fees suddenly look very expensive when you consider how much work they are doing and how much hand holding most sales need. They can't hold a candle to any high street agent with a phone and 30 mins a day to spare chasing everything.

    In short; they are going to have to get so much better on the back end. Decent agents needn't worry.

     
  • Ian Smith

    Damien, Purble Pricks will be paying Rightmove in excess of £15K PER MONTH at the moment at least.

  • Ian Smith

    To give you an idea of how Right Move works for very 32 properties outwith 5KM on your head office you pay for another branch. So if they have 320 live properties they pay 10 x say £400 i.e. £4k per month. based on their volumes its probably 15-20K per month. I work for an online agency and that's how it works.

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