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Purplebricks Finds £230m Stock Market Home

Purplebricks, the online estate agent backed by the City's top fund manager, is preparing to press the button on a stock market listing valuing it at close to £250m.

Sky News has learnt that the company has informed shareholders in recent days that it wants to float as soon as the first week of December, even as a number of initial public offerings are facing a lukewarm response from investors.

Insiders said on Thursday that Purplebricks had appointed Zeus Capital, an investment bank, to steer it through a flotation.

Initial soundings taken from City institutions suggest there is significant demand for Purplebricks' shares even at a valuation of up to £250m, one said.

If successfully completed, a listing would reflect a remarkable growth story even by the standards of British digital and technology companies.

Just six months ago, Neil Woodford, the leading fund manager, increased his stake in Purplebricks to more than 25% when it raised new money at a valuation of just over £100m.

Not much more than a year ago, it was worth just £7m.

The company's growth has been such that it is now said to be the fourth-largest estate agency in the UK by fee-paying customers, with a 60% market share of new online instructions.

A person close to Purplebricks said the rapid expansion was partly the result of its 'hybrid' model, which is based on local property experts who manage the entire sale process.

The company's commission rate is typically a quarter of that charged by a traditional bricks-and-mortar estate agent, the source added.

A flotation has been on the cards for Purplebricks for some time, with its shareholders said to believe that listing before Christmas is a sensible time.

The new entrants to the online property market are attempting to bring a similar level of customer experience to industries such as holiday bookings and grocery shopping, which have been revolutionised by digital competitors.

Purplebricks allows home-owners to sell their properties for a flat fee of £599, compared to an average sum paid to estate agents of more than £5,000 based on the typical commission of 1.8% of a property's value.

It also offers a service to landlords, offering a tenant-finding service for a one-off fee.

In addition to Mr Woodford, the company's backers include Errol Damelin, the former boss of payday lender Wonga, and Paul Pindar, the ex-chief executive of Capita, the outsourcer.

Last year, Mr Woodford was quoted as saying that that the company had "a significant opportunity to lead the market in changing the way we buy and sell houses".

Founded by brothers Michael and Kenny Bruce, who ran the estate agent Burchell Edwards before its sale in 2011, Purplebricks is not the only new entrant to the market.

Sir Charles Dunstone, the co-founder of Carphone Warehouse, has invested in HouseSimple, while the easyJet founder Sir Stelios Haji-Ioannou, has launched a site called easyProperty.

A number of other estate agents have listed on the stock market in recent years, including Foxtons, the hard-charging firm known for its distinctive fleet of cars, and Zoopla Property Group.

The investment bankers who had been working on the Purplebricks IPO at Canaccord Genuity recently left to join Zeus.

Purplebricks and Zeus declined to comment on the flotation plan.

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