Homeserve (HSV) has taken a 40% stake in popular website Checkatrade which lets the public find tradesmen like electricians and plumbers. It has also made a similar investment in a Spanish equivalent service called Habitissimo.
The combined £37m investment looks an interesting move by Homeserve and suggests it may broaden its skills beyond the core focus of boilers, drainage and electrical problems. It also provides a channel for Homeserve to access customers who don’t take out insurance policies to protect themselves against home emergencies.
Checkatrade receives nearly 1m unique customer visits on its website a month, resulting in approximately 1.3m jobs for tradesmen.
Its system relies on customer feedback once a job is done, as a good rating from lots of customers can help make particular tradesmen stand out from the local competition.
NOT THE FIRST TO INVEST IN THIS MARKET
Travis Perkins (TPK) has a stake in a similar business to Checkatrade called mybuilder.com. The company told Shares a few years ago that it made the investment to see if it could market its products specific to job requests on the website.
It also hoped it might be able to offer deals to tradesmen for discounted goods if they agreed to always use Travis Perkins for any jobs sourced through mybuilder.com.
Investment bank Liberum says Homeserve's latest investments don’t warrant making any changes to earnings forecasts near term, despite them both being profitable businesses. It says the money spent on the web portals may delay a special dividend previously mooted.
Investors clearly like the news as it triggers a 1.7% rise in Homserve’s share price to 609.5p.
OPTION TO BUY MORE
Homeserve has options to increase its stake in both businesses. It can buy another 35% of Checkatrade in two years’ time; and it can go from 70% to full ownership of Habitissimo in either four or five years’ time.
Chief executive Richard Harpin comments: ‘Both of these business (Checkatrade and Habitissimo) provide innovative digital platforms, connecting customers to reliable tradespeople.
‘With leading positions in the home repair and improvements market, these businesses will broaden Homeserve’s reach enabling us to meet the needs of younger, non-insurance minded customers who are looking to find immediate help from a wide range of home trades.’
Harpin adds: ‘Together, these investments open up exciting new possibilities to help our customers in their homes as we continue to develop out online capabilities and digital platform solutions.'