The Real Deal New York

Why Redfin is hungry for acquisitions

Brokerage raising $239M for technology and acquisitions
By Meenal Vamburkar | July 17, 2018 11:15AM

Redfin’s Glenn Kelman (Credit: Redfin)

Online-centric brokerage Redfin is seeking to raise up to $239 million, deploying the funds on acquisitions and technology.

“Redfin may choose to use a portion of the net proceeds to invest in or acquire third-party businesses, products, services, technologies or other assets,” the company said in a statement Monday. The brokerage noted that it has no such “agreements or preliminary plans” at this time.

Redfin is raising money through a combined stock and debt offering. The company said it is selling 3.5 million shares of common stock and $125 million aggregate principal amount of convertible senior notes due in 2023. Neither offering is contingent on the completion of the other. Redfin is also offering the stock underwriters a 30-day option to purchase up to an additional 525,000 shares. The underwriters of the notes will have a 30-day option to purchase up to an additional $18.75 million aggregate principal amount of notes.

Last year, the discount brokerage went public in a much-anticipated IPO. Since then, the company has poured money into hiring and advertising — leading to a $36.4 million loss during the first quarter of 2018. But the advertising push helped boost its market share to 0.73 percent, up 0.15 percentage points year-over-year, the company has said.

Still, shares of the company have slumped about 26 percent this year. Redfin has also joined the house flipping trend. Through its “Redfin Now” program, the company buys homes and flips them. The program saw $3.1 million in revenue in the first quarter.

In June, rival Zillow said it was looking to raise $650 million — also noting it may use some of the proceeds for “acquisitions of, or investments in, other businesses, products or technologies.”

Though others in the real estate tech space like Zillow have made a number of acquisitions, Redfin hasn’t followed that model. Its only known acquisition was Walk Score in 2014.