Online estate agent Purplebricks is taking a stake in a German rival as it aims for further growth amid challenging UK market conditions.
The company said it snapped up a joint stake in German peer Homeday worth 25.4 million euro (£22.3 million) via a new equally-owned joint venture with Axel Springer.
Purplebricks has itself invested 12.7 million euro (£11.1 million) to help acquire the initial stake.
Michael Bruce, group chief executive of Purplebricks, said: “Our investment in Homeday secures for us a strong foothold in Europe’s second largest residential real estate market.
“This is a good opportunity for Purplebricks, allowing us to partner early with a dynamic and committed management team, while remaining focused on realising the opportunity in our existing markets.”
Mr Bruce added: “We are confident that, with the combined support of Purplebricks and Axel Springer, the Homeday management team will help to transform the German market, and in the process deliver exceptional value for customers and shareholders.”
Homeday will continue to be run under its current brand and will be led by its chief executive and founder, Steffen Wicker.
However, Purplebricks and Axel Springer will each have a seat on the Homeday board once the initial investment is cleared.
The first investment round is still subject to regulatory approvals.
Homeday reported revenues of around 3.5 million euro (£3.1 million) in the year to December 2017, but logged a 3.2 million euro (£2.8 million) loss.
But the German business is currently forecasting “strong” revenue growth for 2018 and plans to break even in 2021.
Mr Wicker said: “The combination of Purplebricks and Axel Springer as partners in our business is compelling.
“The three-way knowledge share will benefit all parties. We now have the funding and the backing to be a decisive player in the German property market.”
The joint venture – NewCo – will have an option to snap up a further 28.5% in Homeday in August 2019, further extending Purplebricks’ interest abroad amid a difficult UK real estate market.
Purplebricks said UK trading was seeing double-digit year-on-year growth in the UK and growing its market share despite tough conditions.
Mr Bruce said: “I am pleased to report that we continue to perform in line with our expectations and make further gains in market share despite what are challenging market conditions in the UK real estate sector.”
Purplebricks currently holds around 70% of the UK online market.
The company said its recently acquired Canadian business, Duproprio/Comfree, is “performing strongly”, while US expansion is still on track.
It recently extended into Florida, leaving Purplebricks’ footprint across seven states within a year of its stateside launch.
Purplebricks Group shares were up 3.2% in morning trading.