This morning it was confirmed that Purplebricks is to launch on the AIM stock market.
It will have an expected capitalisation of £240.3m, with £58.1m conditionally raised.
The launch is due on December 17.
The debut will throw down an astonishing new marker for the residential property industry.
If the valuation is correct, then Purplebricks will be worth one third of the valuation of Countrywide and nearly half that of Foxtons.
Purplebricks, launched in only April of last year and backed to the tune of £7m by fund manager Neil Woodford, was founded by former Burchell Edwards owners, brothers Michael and Kenny Bruce.
The pair sold the midlands high street business to Connells three years after the brothers bought it out of administration.
The business, with 16 branches, sold in 2011 for an undisclosed sum.
The Bruces then concentrated their efforts on a complicated refurbishment business called JKM Property Solutions, that was chaired by ex-Countrywide boss Harry Hill, who described it as a “brilliant concept”.
When that business was wound down, the Bruce brothers announced their online agency venture.
At launch in April 2014, the Telegraph reported that Purplebricks would “shake up an industry in desperate need of change by providing a more affordable alternative to traditional bricks and mortar estate agents”.
Its backers include Woodford, Paul Pindar, former chief executive of Capita, and Errol, founder of Wonga.
The £240m valuation of Purplebricks, at only 18 months old, compares with Countrywide’s current valuation of £898m and Foxtons’ valuation as of yesterday at £500m.
Zoopla is valued at £1bn.
eMoov, according to its successful crowdfunding bid, says it is worth £20m.
Online agent Hatched, bought last month by Connells, is said to be worth £4m.
The purchase of Hatched raises a question as to whether Connells – having bought the Bruces’ previous high street business but now the owners of Hatched – are to become shareholders in the £230m business of Purplebricks that now wants to become the juggernaut in the online agency market.
However, all of these valuation sums pale into significance with Rightmove’s current valuation of nearly £4bn.
Comments (26)
Bruce brothers experts at losing other people’s money
…..is there a regulatory body that investigates this type of pre-float valuation in order to protect those that are being tempted into investing?!
……is there no national newspaper seeking to run a news article on how such fantastic valuations can be placed on barely performing virtual business?
……are there any news article databases that provide detail on pre-float company values, actual float value and thereafter annual profit/loss performance of those floated companies?
I just can’t figure out how this type of financial investment can proceed apparently unregulated ….when it seems to be “too good to be true”
The image of t*rd rolled in glitter springs to mind…… and on this occasion, perhaps purple glitter?
Are investors so gullible to accept this type of virtual pre-float proposal from any pre-float company? ……if so I need to jack in my current career and move over to the get rich virtually quickly in reality business!
Who owns the oxygen we breathe….. can I just take it all and sell it back to the human race?
# pump and dump
Just a point for accuracy which this article omits. The Bruce brothers originally acquired a profitable and cash rich Burchell Edwards in July 2006. They took the business into administration in late 2008, before “buying” back a slim lined version, which they subsequently sold to Connells.
a fool and their money…..
When PB go BR maybe RM will start to back it’s main client base?
My understanding is that purple bricks are apparently running at break even. The real question however is how much more can they genuinely ever do? Much has been made of comparing companies like this to Amazon but there is a significant difference: I’ve used Amazon 3 times in the last week, how many times in a month am I going to use Purple Bricks? Once? Every 8 years? So they have to get sufficient NEW customers every single day.
If their current inventory covers their costs, they need to do the same quantity of instructions again to turn what an £8 profit? To put them with the expected revenue a company of £200m would achieve even they would need to completely dominate the market.
When all you do is employ take on guys to place a property on a portal then frankly that will never happen because in small numbers the horror stories don’t appear, in large numbers they will and any estate agent who has ever marketed a property out of their area knows, you are on a wing and a prayer and probably don’t get the best price for the customer.
They couldn’t be further from break even
I meant break even in terms of daily running cost, not break even in terms of what they have spent to date. I guess we will see when they publish their financial statements.
I’ve been told recently that PB are spending over £500k per month on advertising, when you look at what they charge, list and sell they must be losing money day after day so where’s the valuation come from?
I had a valuation on my business recently which turns a fairly modest profit of £350k per annum. I was told by both business valuation brokers and a couple of the usual hungry corporate investors that they would give me about 5 times profit. That makes my business worth around 1.75m. I turn a healthy profit and have done for many years. We are market leaders in two out of the three towns we operate in.
Therefore a company with a good profit is worth a quarter of some and a 20th of others that don’t make a penny and wont for years.
Am I missing something??
I understand buying into the dream but you’ve got to have serious amounts of disposable cash to take a punt on some of these.
I totally agree with you but I suppose their argument is that their business model is ‘so disruptive’ that they will make a profit in their vision of the future and you and I will cease trading because we no longer make a profit as all our clients have moved to them.
You are being fleeced, according to Radio 4 data businesses are changing hands for up 40x profit. Agency is a data generator and therefore far more valuable than 5 or 10 times profit. Get in touch and I will show you where to look to see the value of firms who are accessing and trading Agent’s data.
Robert May is right the new way of looking at things is little to do with profit and loss but users, data and so on. We saw this in the late 80s when the great estate agent buyout occurred, at that time whilst there was interest in profit there was a huge focus on potential for selling financial services. In many ways this is similar just different potential.
Whatever you think of online agents there is money to be made and not just from selling houses, I congratulate the owners for their forethought.
rubbish. the stock market pays a fortune on future earnings. in the real world most businesses are only worth about 2 x profit.
If i have an business making £100k profit are you really going to pay me £500k for an old database?
no you will invest 200k starting from scratch.
.com bubble – people just dont understand agency and that is what purpleshits are trading on – sellers and investors included.
It isn’t an old database, every day in agency the database is refreshed and current with people looking to sell, looking to buy, looking to let and looking to rent plus a whole heap of people just looking.
The vertical or horizontal opportunities are massive because it is motivated data and not historic. An agency doesn’t have to do much to receive repeat data; the business it does to day will come back again in a few years so even agencies selling in the trough of a market have a valuable potential (stored) earnings that have value.
The only thing of any value is your lettings portfolio as that is repeatable income. Forget the sales part 1 x max
Let’s say an owner earning £350,000 profit each year sells and gets 10x profit for the business, £3.5 million to stick into an investment that yields. 3% possibly 5%
What a brilliant way to turn £350,000 into £175,000
You people have no idea what you’re talking about. Data businesses are driven on volume; your businesses don’t have volume
Data businesses are also driven by quality data, the ability to identify those people most likely to switch utility suppliers for example!
A typical branch agency with its annual turnover of vendors and applicants represents a whole heap of opportunities that utility, insurance and finance companies want to get their hands on.
I’m not sure if you are someone trying to keep a lid on the value of the vertical/ horizontal opportunities or whether you don’t understand the value of a single instruction but perhaps you ought to look at the financials of the companies who are accessing and trading agents data before reckoning we don’t know what we are talking about or have any value. I can think of one 3 individuals who would be very upset not to be able to access agents data.
I’d love to find out who’s paying 40x. If you can tell me, I’m off! How do I get in touch with you??
I don’t know who is buying the data businesses just passing comment on an interesting discussion on R4 Moneybox about the value of data businesses.
You can track me down on Twitter or Linkedin or Ros will pass on an email.
It would be nice to be able to offer you an alternative,un-biased view on the true long term value of your business.
Does purple bricks even make a profit or is this valuation based on the hope that they will in future? Bonkers. With so many new online competitors launching each month it will be hard for any online agent to gain enough market share to make their business big enough to sustain their TV advertising expenditure, which their business model seems to depend on. Don’t buy the shares if you are hoping for a dividend.
The worlds gone mad!!! Woodford clever trying to get out with very decent return – those who invest will lose the lot!!
Looks like the brothers have a real love for agency and thats why they want to help people sell with purplebricks. #sellout #bahamas here they come.
#bestplaceforthem – or am I being a darned nasty pasty? ;o)