U.K.-based real estate agency Purplebricks Group PLC established a 50/50 joint venture with Axel Springer SE to jointly acquire a 25.9% stake in German online estate agent Homeday GmbH.

The deal, which includes Axel Springer's existing 4% stake, marks Purplebricks' first foray into the European real estate market.

For the venture, dubbed NewCo, Purplebricks will provide €12.7 million of the first-round investment through its existing cash resources for an effective 12.9% stake in Homeday. The investment, subject to approval by the relevant antitrust authorities, will give NewCo a valuation of €25.4 million.

In August 2019, the joint venture partners, through NewCo, will be able to invest further for an additional 28.5% interest in Homeday. Alternatively, existing Homeday investors and founders may request that NewCo invest further if certain performance criteria are met at the time.

The second round of investment would raise NewCo's stake in Homeday to 54.4% and Purplebricks' interest to 27.2%. The latter may fund its additional €20 million share of the investment through cash or the issuance of Purplebricks shares to Axel Springer.

Between 2021 and 2024, NewCo will be able to exercise certain put and call options, subject to certain financial criteria being met, to buy the remaining shares in Homeday that it does not already own.

Both Purplebricks and Axel Springer will be represented on the board of Homeday, effective from completion of the first round of investment. The Homeday business, meanwhile, will retain its brand.

Zeus Capital Ltd. served as Purplebricks' nominated adviser, while Peel Hunt and Investec Bank acted as brokers.