Advertisement

City Star Woodford Raises Bet On Purplebricks

City Star Woodford Raises Bet On Purplebricks

The City's top fund manager has increased his bet on Purplebricks, the online estate agent, by backing a private funding round which values the company at more than £100m.

Sky News has learnt that Woodford Investment Management, which is headed by Neil Woodford, has raised its stake in Purplebricks to more than 25% following a £10m share sale.

The fundraising, which also included a number of other existing investors, represents a bold bet by Mr Woodford's new Patient Capital Trust, which invests in private companies with strong growth prospects.

People close to Purplebricks said the company was continuing to consider the potential for a stock market listing, although such a move is unlikely in the very short term.

Bankers at Canaccord Genuity are working on those plans, they said.

Purplebricks is one of the UK's fastest-growing online estate agents, and along with rivals is mounting an aggressive assault on established high street rivals.

The new entrants are attempting to bring a similar level of customer experience to industries such as holiday bookings and grocery shopping, which have been revolutionised by online competitors.

Mr Woodford's new investment is the second he has made in Purplebricks, which enables home-owners to sell their properties for a flat fee of £599, compared to an average sum paid to estate agents of more than £5000 based on the typical commission of 1.8% of a property's value.

Purplebricks also offers a service to landlords, offering a tenant-finding service for a one-off fee of £199.

Its other backers include Errol Damelin, the former boss of payday lender Wonga, and Paul Pindar, former boss of Capita, the outsourcer.

Last autumn, Mr Woodford was quoted as saying that 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.”

Founded by brothers Michael and Kenny Bruce, who ran the estate agent Burchell Edwards before its sale in 2011, Purplebricks is far from the only new entrant to the market.

Sir Charles Dunstone, the co-founder of Carphone Warehouse, recently ploughed millions of pounds into HouseSimple, while the easyJet founder Sir Stelios Haji-Ioannou, has launched a site called easyProperty.

The emerging online players have tried to add value to the property-selling process by allowing customers to personalise the services they use while charging lower fees than high street peers.

A number of estate agents have listed on the stock market in recent years, including Foxtons, the hard-charging firm known for its distinctive fleet of cars, and Zoopla Property Group.

A Purplebricks spokesman declined to comment on the fundraising.