Oct (Shenzhen: 000069.SZ - news) 15 (Reuters) - British online estate agent Purplebricks said on Monday it formed a joint venture with German publisher Axel Springer (Swiss: SPR.SW - news) to jointly buy a 25.9 percent stake in German online estate agent Homeday, tapping into a fast-growing market.
The 50-50 joint-venture company will have a valuation of 25.4 million euros ($29.35 million). Purplebricks' investment in Homeday will be 12.7 million euros for a 12.9 percent holding.
Purplebricks' foray into continental Europe comes as the property market at home has been hit by lower household spending, pinched by inflation that has risen faster than pay.
"Although the online market in Germany is still small, it is a fast-growing market and Homeday has developed rapidly to become the market leader in just four years, achieving close to 50 percent market share of the online space," Purplebricks said.
Homeday was launched in 2015 and operates homeday.de, a website that helps customers to buy or sell real estate, across 65 German residential markets.
Germany represents one of the largest residential real estate markets in Europe, with more than 600,000 annual sales transactions, Purplebricks said, adding that the German housing market was in good health.
The company has been spending heavily on marketing and overseas expansion. It currently operates in Britain, Australia and the United States, where it launched last September.
Purplebricks also said it continues to trade in-line with the guidance it issued in July. It had forecast full-year revenue of 165 million to 185 million pounds then.
Revenue and gross profit doubled in the year to April 30, but operating losses quadrupled in July.
Purplebricks and Axel Springer will have an option to buy another 28.5 percent in Homeday in August 2019, raising their stake to 54.4 percent for an additional investment of up to 20 million euros.
Homeday's management team, led by CEO and founder Steffen Wicker, will continue to run the business under the Homeday brand. Purplebricks and Axel Springer will each have a seat on the Homeday board.
Axel Springer is the third largest shareholder in Purplebricks with a 12.48 percent stake, according to Refinitiv Eikon data. ($1 = 0.8654 euros) (Reporting by Shashwat Awasthi and Arathy S Nair in Bengaluru; Editing by Vyas Mohan, Bernard Orr)