SINGAPORE (Bloomberg): Singapore real estate startup PropertyGuru Pte has agreed to acquire all of the shares in REA Group Ltd.’s operating entities in Malaysia and Thailand, marking the biggest acquisition in its 14-year history.
PropertyGuru will take over iProperty.com.my and Brickz.my in Malaysia and thinkofliving.com and Prakard.com in Thailand from Australia’s REA Group, the Southeast Asian company said in a statement on Monday (May 31).
As part of the deal, REA, which is majority-owned by Rupert Murdoch’s News Corp. empire, will get an 18% equity interest in PropertyGuru and appoint a director to its board. No price has been disclosed for the deal.
"We are investing in these markets as they emerge out of Covid in the coming years,” Chief Executive Officer Hari V. Krishnan said in an interview with Bloomberg TV’s Haslinda Amin and Rishaad Salamat.
"Some of the macro mega trends like urbanisation, digitisation, the emergence of the middle class, remain in place.”
The announcement comes after a flurry of deal-making by the most valuable startups in the region. Ride-hailing and payments giant Gojek and e-commerce leader Tokopedia announced earlier this month they will combine their businesses to create the largest internet company in Indonesia.
Close Gojek rival Grab Holdings Inc. last month agreed to go public in the US through a combination with Altimeter Growth Corp. in the largest-ever merger with a blank-check company.
For PropertyGuru, the deal will likely reduce competition in Malaysia and Thailand where the company has been competing against REA’s affiliates. Krishnan said the firm will keep the existing brands and invest in their development for the foreseeable future.
The CEO declined to provide a specific timeframe for going public. The company regularly reviews the potential for an initial public offering after scrapping plans to list on the Australian stock exchange in October 2019 on concerns over its targeted valuation of A$1.36 billion (US$1 billion).
In September, it announced S$300 million (US$220 million) in new funding from existing backers TPG Capital LP and KKR & Co Inc.
"If the opportunity is right and if we feel our assets would be valued by public market investors, we will take it public, ” he said. "But today’s announcement is more about building the core capability set for business and investing heavily into Malaysia and Thailand.”
The transaction, which is expected to close in July, is conditional on REA’s divestment of its 27% stake in PropertyGuru’s rival 99 Group, which it has a joint venture with in Singapore and Indonesia.
"Discussions are well progressed in relation to the divestment, ” according to REA’s stock exchange filing on Monday.
99 Group CEO Darius Cheung told Bloomberg News that his company is currently in discussions with investors to raise funds, some of which will be used to acquire REA’s 27% stake in 99.
"This move allows us to free from the shackles of having our most significant shareholder being a public company, ” Cheung said, adding that he plans to enter Malaysia to compete against PropertyGuru.
The Malaysian and Thailand businesses are expected to contribute A$15 million to REA’s revenue in the fiscal years of 2021, though they will probably reduce its earnings before interest, taxes, depreciation and amortization by about A$11 million, according to the REA filing.
REA shares fell as much as 0.7% in Australia on Monday.
Launched in 2007 to help Singapore residents search for real estate online, PropertyGuru has become a household name in the property-crazed city-state.
Today, it’s the largest real estate marketplace in Southeast Asia with operations spanning countries including Vietnam, Indonesia, Malaysia and Thailand.