Singapore-based real estate portal PropertyGuru Group has deferred plans for an initial public offering (IPO), and will not list in 2016, chief executive and founder Steve Melhuish told DEALSTREETASIA. The portal, a market leader in four markets across Southeast Asia, where it operates, had initially planned to go public this year.
According to Melhuish, it is not the downturn in the realty market in Singapore, where property prices are witnessing their longest losing streak in 17 years, which has got the company to defer its listing plans. Neither is the collapse of Singapore’s IPO market to blame.
The PropertyGuru co-founder and chief executive attributed the change in strategy to fact that the portal last year raised raised S$175 million ($130 million) from a strategic consortium of investors including leading private equity firm TPG, Indonesia’s largest media group Emtek and Asia Pacific-based tech venture capital firm Square Peg Capital. It is also estimated to be the largest funding round in a Southeast Asian tech company in 2015.
“We are definitely not listing this year. While the IPO remains an option, our business continues to grow nicely. We just closed a round of investment six months ago, and we don’t need to list to raise capital. Earlier, when we said we planned to list in 2016, it was before we raised S$175 million in fresh investments. This investment will help us grow the business the next few years, and we are not in any hurry to list,” he said in a telephonic chat on Tuesday.
Earlier in the day, Melhuish, during a chat post a media event said the company did not require any further funding after its last (S$175 million) round. “We are now completely funded and this enables us to be more aggressive from the M&A point of view.”
This was marked with the public announcement on 13 January 2015 of its purchase of the real estate media businesses of Ensign Media, a corporation incorporated in Singapore but with most of its operations in Thailand. Owned by Terry Blackburn, who will be joining PropertyGuru to oversee the management and integration of the new media assets into PropertyGuru as well as drive further growth.
The purchase includes regional luxury property and lifestyle magazine and website Property Report, which publishes news and insights on investment destinations and the Asia Property Awards, described as one of Southeast Asia’s largestst and most credible property industry awards and maintains national editions in most ASEAN markets.
In response to this development, Blackburn elaborated: “Over the past 10 years, Property Report has established an expertise in providing its readership with the latest insights on luxury property investment in Asia, and we are very excited about this next stage. The Asia Property Awards are already the region’s largest and most respected real estate awards and now, with PropertyGuru’s support, they will be even bigger in 2016 and the years ahead.”
Blackburn adds: “This is great news, both for developers seeking credible recognition, and for investors looking for the region’s best properties. Together with PropertyGuru, we will ensure that award winners in the world’s most exciting real estate destinations receive the widest possible recognition for their achievements.”
These profitable businesses will complement PropertyGuru’s existing businesses. With this full asset purchase, the existing staff of Ensign Media will also be absorbed into PropertyGuru. In an interaction with DEALSTREETASIA, Melhuish described the deal as “worth millions”, declining to state specific financial terms but saying the transaction was worth “…millions of dollars in various components over a 3-year period…”, without any share swap involved.
Essentially a consolidation move that strengthens their media presence and digital content, this acquisition combines the reach of PropertyGuru and Ensign Media’s brands into a single corporate group. The addition of the Asia Property Awards and its conference brand, the Property Report Congress, significantly strengthens PropertyGuru’s mindshare and regional presence.
Asked about further developments in their mergers & acquisitions pipeline, Melhuish shared with DEALSTREETASIA that they were currently working with TPG regarding future deal flow but was not able to provide details regarding any pending transactions.
Melhuish explained to DEALSTREETASIA: “The challenge with our business is that barriers tend to be reasonably low from a technology point of view. And therefore you now have to continue to invest; in content, in innovation and in building relationships”
He added, “For example, TPG in Singapore is run by a former Khazanah executive [Ganen Sarvananthan]. We’ve got a member of the royal family on our board in Malaysia and they’re opening doors at the owner level, so wer’re able to get some of the relationships going as well.“
Explaining the acquisition as being motivated by the question of, “Are there gaps in the business and how do we strengthen it?”, Melhuish added: “The strategic thinking for the next five years for establishing PropertyGuru as a clear market leader is important.”
He noted to DEALSTREETASIA that comparable real estate portals in markets like Germany, France, the UK and China saw the market leaders there maintain a market share of between 50 per cent to 70 per cent, with a strong brand presence leading to better monetisation, outreach and superior pricing power. He added, “As the markets mature, we want to be in that position in all the markets we’re in. The M&A more recently has been around supporting that.”
Enhancing their value to Asian real estate advertisers, the deal creates a single media partner that can support regional branding initiatives across multiple platforms, with the ability to reach and engage a wide audience. Ultimately, this positions and enables PropertyGuru to drive more real estate transactions.
The acquisition will see PropertyGuru’s 14 million users join Property Report’s 70,000 online and offline readers, with combined access to PropertyGuru’s 600 monthly research and news articles published in three languages across four markets, and Property Report’s 100 plus online features per month.
Commenting on the acquisition, Melhuish said, “We’re excited to welcome the Ensign team and businesses to PropertyGuru. This latest acquisition strengthens the Group’s content, geographic reach and services we provide to real estate developers regionally. With the recent implementation of the ASEAN Economic Community (AEC), ASEAN has been forecast to become the world’s fourth largest economy by 2030.”
He added, “In the next ten to fifteen years, we expect increasing cross-border movements and foreign investments, creating more demand for properties in these markets. With 14 million property seekers from all over the world using our online portals every month, searching for the right property, gathering trends, insightful news and feature stories, PropertyGuru is well-placed to help them find the home they’ve always dreamed about.”
With urbanisation trends in the Asia Pacific (APAC) driving the growth of cities, Melhuish noted during a media interaction that this was occurring amidst a growth in the region’s middle class, with corresponding increases in affluence and consumption, as well as people increasingly investing in properties as an asset class.
The Diplomat observed that with urbanisation in Asia just beginning,”…mature and emerging cities alike, local governments and city leaders need to get better at collaborating with all city stakeholders from different departments, sectors and civil society groups”, PropertyGuru is keen to position itself as both an information brokerage and though influencer amidst this growth.