LONDON (Alliance News) - Shares in Purplebricks Group PLC were trading down on the estate agency's first day as a listed company, after the less than two-year-old firm conducted the second biggest float of the year on London's AIM junior market.
Having only launched in April 2014, Purplebricks was valued at GBP240.3 million by market capitalisation at the 100 pence pricing of the shares sold under its IPO. However, the stock was trading down 5.9% at 94.15p on Thursday morning. Shareholders, including directors and management, who were invested in the business before IPO raised GBP33.1 million by selling down part of their ownership position.
The group's book value - the difference between assets and liabilities - was GBP4.4 million at the end of April, up from GBP1.6 million one year prior to that, while revenue grew to GBP3.4 million from GBP11,855 in that period. In the same period, Purplebricks' pretax loss widened to GBP5.4 million from GBP2.3 million, largely due to higher spending on sales and marketing.
Chairman Paul Pinder, the former chief executive of Capita PLC, retains a 4.46% stake in Purplebricks, while Michael Bruce, the company's co-founder and chief executive, owns roughly 17%. His brother Kenny Bruce, co-founder and sales director, owns a 5.05% stake. Neil Woodford, the prominent fund manager, remains a backer of the business, holding a 19.90% stake through CF Woodford Investment Fund and an 8.78% stake through Woodford Patient Capital Trust PLC.
The estate agency raised GBP25.0 million through its listing, and the money will enable the company to deepen its presence in London and Scotland, raise brand awareness, and allow it to invest in technology.
Purplebricks distinguishes itself from high street rivals by virtue of its "hybrid" approach, under which it eschews the costs of operating leased branches.
The company is keen to emphasise that it differs also from online competitors through its 165 "local property experts", who are tasked with visiting properties and providing valuations. The property experts take responsibility for advising customers throughout the sales process.
Purplebrick charges s a flat fee of GBP798 including value-added tax for sales across the UK other than some areas of London, where the charge rises to GBP1,158, while additional revenue is generated through fees from conveyancing, mortgage referrals and insurance. This is opposed to the normal estate-agency model of taking a percentage of the sales price.
"The funds raised will allow us to further deepen our presence across the UK through additional investment in people, technology, infrastructure and marketing to deliver our ambitious growth plans as well as value for all of our shareholders," Chief Executive Michael Bruce said in a statement.
Hardman & Co, which has been commissioned by Purplebricks to write research, said the company's "first mover advantage" provides "substantial scope" for growth and suggests the valuation of its shares is "modest".
Zeus Capital, an investment bank, is the estate agency's nominated adviser and broker.
Meanwhile, Levrett PLC, a company formed to acquire businesses in the pharmaceutical and biotechnology sector, joined the Main Market of the London Stock Exchange on Thursday.
"We are very pleased to have successfully concluded the placing and admission of Levrett. There are a number of very exciting opportunities in the pharmaceutical and biotechnology sectors which we look forward to exploring further," Chief Executive Pascal Hughes said.
Levrett was valued at GBP1.9 million by market capitalisation on going public, with 45.75 million shares placed at 2.0 pence each to raise GBP915,000 net of costs. The company has 95.75 million shares in issue. Shares in Levrett were trading up at 2.9899p Thursday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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