Feb 23 (Reuters) - Shares in Purplebricks Group Plc rose as much as 19 percent on Thursday after the British online real estate agent said it would enter the U.S. market, having built a leading position in a fragmented industry at home.
The company, backed by star fund manager Neil Woodford, said late Wednesday it had raised about 50 million pounds ($63 million) in an oversubscribed placing of 22.7 million shares to back its plans to expand into a number of U.S. states, which it did not name.
The move into its third market after Britain and Australia comes amid slowing sales of UK second homes since the country’s vote to leave the European Union last June and some tax changes, which have led shop-based rivals Countrywide and Foxtons to issue warnings.
However, Purplebricks has managed to grow its business over that period, thanks to its low-fee model of local experts, who provide valuations, and online systems that handle selling and buying of properties.
The company is the largest online agency in a fragmented British market and says it is now the third biggest in the industry overall, although UBS pegs its UK market share at only about 2 percent.
Purplebricks said on Thursday it believed it would be able to replicate its UK success in the U.S. market, which is similarly fragmented with more than 2 million licensed real estate agents.
The company estimates the U.S. real estate market is worth about $70 billion annually in total commission income and said it expected the first stage of its roll out would begin in the second half of 2017.
“The potential could be very substantial,” said Russ Mould, investment director at AJ Bell.
At 1615 GMT, Purplebricks’ shares were up 16.8 percent at 264 pence, off an earlier high of 269.25 pence. The stock floated in December at 100 pence.
$1 = 0.7994 pounds Reporting by Rahul B and Esha Vaish in Bengaluru; Editing by Mark Potter
Our Standards: The Thomson Reuters Trust Principles.