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TODAY'S OTHER NEWS

Woodford slashes Purplebricks stake as rumours swirl on agency's future

Beleaguered fund manager Neil Woodford, one of the early champions of Purplebricks, has slashed his stake in the company from 28.9 per cent to 23.9 per cent.

The reduction in shares has bagged Woodford about £16m in his quest to gather money to help bail out his other ailing investments; meanwhile, this means that the biggest stake in Purplebricks is now held by the digital media arm of German publishing firm Axel Springer.

The Springer empire now owns 26.6 per cent of the hybrid agency.

Axel Springer - which owns titles as diverse as Rolling Stone and Insider Business - this week purchased over 43 million shares in Purplebricks; this was roughly the amount sold by the agency’s founders Michael and Kenny Bruce, and Michael’s wife Isobel.

There’s a further twist in the saga this morning: the Daily Mail is reporting that it has been told that Axel Springer is “open to opportunities” to buy more even shares in Purplebricks.

If this came to pass it could mean the agency would be taken over by Axel Springer and be subject to that company’s long-term investment decisions.

The Mail believes this could involve taking it off the London Stock Exchange’s junior AIM market, where it has had a volatile existence since floating in late 2015. 

Yesterday, Purplebricks’ share price closed at 109.4p, some 3.8 per cent up on the opening price; however, that is still 23 per cent down on the past month and 74 per cent down on the figure this time in 2017.

Neil Woodford suspended dealing in his Woodford Equity Income Fund on Monday; this is not the fund that invests in Purplebricks, but in a bid to shore up this fund Woodford is believed to be attempting to raise money from elsewhere, hence the selling of some shares in Purplebricks yesterday.

Woodford yesterday evening had another serious blow with news that the wealth management group St James's Place dropped him as a manager of its huge £3.5 billion fund. 

This will heighten pressure on Woodford to divest himself of investments producing low or negative returns. Only this week a BBC correspondent cited Purplebricks as a “dog” - slang for a poor investment choice.

  • Andrew Stanton Estate Agency Insights Strategies

    With a media frenzy around Neil Woodford - apparently even Radio 2 Jeremy Vine is commenting on NW's fall from grace - the only question is - will a new investor jump in? Will Axel Springer buy more shares, or will the 'online disruptor' become another dot com dream and be allowed to rest in peace.

    As stated previously with a traditional agent, 160K of seed capital utilised to start and fund a cold start estate agency branch will in 36 months be paid back in full plus a profit of 5%, in 48 months profit will be 20% plus. Given the tens of millions that 'online disruptors' have squandered, with 5 large online concerns closing or failing in less than a year, I could have used all the lost money and have built a traditional 1,000 branch agency in the UK, and would actually be paying a dividend to shareholders.

    Until people realise that tech is moving forward in every industry, and just to say we have an online model that is better than a traditional model - does not cut the mustard, especially when online estate agency is actually more expensive to run than traditional estate agency.

    After nearly 5 years, PB has never made a profit, still charges all vendors an upfront fee, and still only completes on 50% of the properties it lists, and the need for more funds to prop it up as it burns through millions on advertising to keep the brand name alive is one of the reasons that it has failed. If the public thought PB was a good thing - it would not need to rely on running adverts telling everyone how brilliant it is because it does not charge commission.

  • Paul Barrett

    Accepting what you suggest why is it then that Countrywide has failed.?
    Haven't they followed your suggested model!?

  • Vilesh Rew

    SLASHED HIS STAKE? A drop of 5% in the total value or 18% of his total holding. Slashed? Really? Why sensationalise everything, ETA? You're getting very tabloid-esque.

  • Andrew Stanton Estate Agency Insights Strategies

    Countrywide failed because less than 4 years ago - the top directors of CW most of whom had never run an estate agency - decided to get fresh blood into the company - then installed a person with zero industry knowledge who was chosen as they happened to be in the right place at the right time in their previous job. Then all the talented team who opposed the new CEO were fired/resigned - same thing - leaving CW to lurch from disaster to disaster. If CW had followed my model, high fees, high levels of service, high rewards for top performing staff - then they would not have failed.

    In a way that is the beauty of new start company's they do the right thing intuitively, they are so driven and focused on surviving that they push forward and adapt, most large company's have a life cycle of 10 years, they then adapt and morph into something new or die, it is the first 36 months that establishes the brand.

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