Purplebricks sets sights on NYC expansion after $177M investment
Axel Springer's funds gives it an 11.5 percent equity stake
Purplebricks, a London-based discount brokerage, said Monday it received an $177 million equity investment from German media group Axel Springer SE to accelerate its expansion to New York.
The company, which launched in 2014, said it would earmark $71 million of the cash infusion to ramp up operations in the United States. Purplebricks now plans to launch in New York next month, instead of in July.
In a statement, Eric Eckardt, Purplebricks’ U.S. CEO, said the $71 million will go toward expanded advertising as well as “strategic hires that will bolster our growth.”
The deal — which gives Axel Springer an 11.5 percent stake in Purplebricks — reflects investor interest in lower-cost brokerage options. Last year, Seattle-based Redfin went public in a highly-anticipated IPO. Redfin’s 2017 revenue soared 38 percent to $370 million in 2017, but it lost $15 million.
Purplebricks debuted in Los Angeles six months ago, on the heels of a $60 million investment from investors. The publicly-traded company has a market cap of around $1.08 billion, compared to$341.85 million when it went public in 2015.
Despite its rapid growth, Purplebricks has been stung by controversy after the investment bank Jeffries questioned its sales figures. It was also slapped on the wrist by an advertising watchdog in Australia over misleading ads promising “low, fixed fees.”