Two City veterans are heading for a clash over the future of troubled online estate agency Purplebricks.
Shares in the loss-making firm are now worth 9½p – way 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 that wants to replace him with Rightmove co-founder Harry Hill. The row will come to a head tomorrow at the Purplebricks shareholder meeting in London.
Brickbats: Harry Hill, right, says Purplebricks boss Paul Pindar, left, may have to quit
Purplebricks has advised shareholders to reject the move to unseat Pindar by Huntress Nominees, backed by activist Adam Smith’s Lecram investment vehicle, to unseat Pindar.
Hill set up Rightmove, which also later became a FTSE100 firm, and built estate agency group Countrywide before selling it for £1billion.
He told The Mail on Sunday he was ‘intrigued’ by Purplebricks’ business model and turnaround potential. Unlike traditional estate agents, who charge a percentage of the sale price, Purplebricks gets paid a flat fee for every property listed – whether it sells or not.
The number of these so-called instructions is stable but revenue from them fell to £24million from £26.6million in the six months to October. House prices are falling at their fastest rate since the 2008 financial crisis, according to Halifax, and Hill has warned they could drop by up to a fifth.
Hill hit out at Purplebricks’ ill-fated acquisitions overseas and said he would reappraise its business strategy, vowing to axe advertising, because he said awareness of the brand was already high. He also said Purplebricks would ‘never make a profit’ if it was going to offer similar services to traditional estate agents while only charging a £1,200 flat fee (£1,500 in London).
He said: ‘It’s impossible. You cannot do it. Selling houses isn’t easy, it’s bloody hard.’
He added: ‘If you try to compete without charging more money you will fail.’
One option is to close the business and return £30million of cash – its stock market value – to long-suffering shareholders, Hill said.
German publisher Axel Springer plans to vote for Pindar, despite seeing the value of its 27 per cent stake all but wiped out.
But Hill urged Pindar to quit if institutional investors that own the bulk of the shares fail to back him.
‘If I was him I personally would feel embarrassed and say it’s probably time somebody else had a go,’ Hill said. He also reserved judgment on new chief executive Helena Marston and her team.
‘It’s yet to be proven whether the people on the ground are up to it or not,’ he said. ‘They’ve been in place a relatively short time. The chief executive is not from an agency background but that doesn’t necessarily mean she can’t do it.’
Purplebricks declined to comment on reports that it was planning to raise its flat-rate fee to at least £3,000 in London and the South East in the New Year.
