German digital giant Axel Springer backs Purplebricks with £125m deal

● Funding deal comes as online estate agency warns sales are below forecasts

German media publisher Axel Springer has bought a £125 million slice of Purplebricks as the online estate agency also revealed annual revenues would come in below forecast.

Purplebricks said the acquisition of an 11.5 per cent stake in the firm includes a subscription for £100m of new shares which would help turbocharge its US expansion.

Axel Springer, which publishes The Die Welt and Business Insider, will become the fourth largest shareholder behind fund manager Neil Woodford, Purplebricks founder Michael Bruce and Old Mutual, which own 26 per cent, 13.7 per cent and 13.6 per cent respectively.

Bruce, chief executive of Purplebricks, said the firm was continuing to “push boundaries and challenge conventional thinking”.

He said: “The strategic partnership with Axel Springer is ground-breaking and will propel Purplebricks further towards our strategic goals and global ambition.

“We now have the platform, funding and, through Axel Springer’s experience, as well as the appointment of four new leading non-executive directors, the expertise to achieve our vision.”

Axel Springer already operates a string of property websites including France’s Seloger and German portals Immowelt and Immoweb. Adrian Blair, Simon Downing, Mike Wroe and Axel Springer’s Andreas Wiele will join Purplebricks as non-executive directors.

Wiele said: “Under the leadership of its founder Michael Bruce, Purplebricks has created a highly innovative digital real estate platform and has become the clear market leader in the UK in a short space of time.

“For Axel Springer, this minority stake offers the opportunity to participate in an innovative, fast growing business model in new markets.”

Purplebricks said it would use £50m of the subscription proceeds to bolster its US rollout, which launched in September. The group has already opened bases in New York and Los Angeles and has been pushing into San Diego, Sacramento and Fresno.

However, yesterday’s announcement was partly overshadowed by news that the estate agency’s annual revenues would fall short of company forecasts following a financial hit from the “Beast from the East”.

Purplebricks said the severe weather recently would shave around 5 per cent off its group revenue predictions of £98m, wiping just over 10 per cent off its shares which closed down 31.4p at 280p.