Pressure builds on Purplebricks as City veterans vie for control

Two City veterans head for a conflict over the future of troubled online real estate agency Purplebricks.

Shares in the loss-making company are now worth 9½p – well off their £5 peak in 2017 – amid concerns about the company’s strategy and the state of the property market.

Chairman Paul Pindar, who was responsible for growing Capita into a FTSE100 outsourcing giant, is under pressure from an activist investor who wants to replace him with Rightmove co-founder Harry Hill. The row will come to a head tomorrow at Purplebricks’ shareholder meeting in London.

Purplebricks has advised shareholders to reject the move to fire Pindar by Huntress Nominees, backed by activist Adam Smith’s Lecram investment vehicle, to fire Pindar.

Hill founded Rightmove, which also later became an FTSE100 company, and built up the Countrywide brokerage group before selling it for £1bn.

He told The Mail on Sunday that he was “intrigued” by Purplebricks’ business model and turnaround potential. Unlike traditional real estate agents, who charge a percentage of the sale price, Purplebricks gets paid a set amount for every property listed – whether it sells or not.

The number of these so-called instructions is stable, but the revenue from them fell from £26.6 million in the six months to October from £24 million to £24 million. Home prices are falling at the fastest rate since the 2008 financial crisis, according to Halifax, and Hill has warned they could fall by a fifth.

Hill lashed out at Purplebricks’ ill-fated acquisitions abroad, saying he would rethink its business strategy and vowing to stop advertising, saying the brand was already well known. He also said Purplebricks would “never make a profit” if it offered similar services to traditional estate agents, while charging only a flat fee of £1,200 (£1,500 in London).

He said, ‘It’s impossible. You can not do it. Selling houses isn’t easy, it’s damn hard.’

He added, “If you try to compete without asking for more money, you will fail.”

One option is to close the company and return £30 million in cash – the market value – to long-suffering shareholders, Hill said.

German publisher Axel Springer plans to vote for Pindar, despite the fact that the value of his 27 percent stake has all but been wiped out.

But Hill urged Pindar to quit if institutional investors who own the bulk of the shares don’t support him.

“If I were him, I’d personally be embarrassed and say it’s probably time someone else tried,” Hill said. He also reserved judgment on new CEO Helena Marston and her team.

“It remains to be proven whether the people on the ground can handle it or not,” he said. They’re relatively short. The chief executive doesn’t have an agency background, but that doesn’t necessarily mean she can’t do it.’

Purplebricks declined to comment on reports it planned to increase its lump sum allowance in London and the South East to at least £3,000 in the new year.