Southeast Asia’s largest real estate listings platform PropertyGuru is on the hunt for mergers and acquisitions (M&A) in areas such as mortgage-related fintech, data and B2B software solutions to solidify its leadership position in the region.
According to Hari Krishnan, CEO of PropertyGuru, the company has already initiated talks with potential targets in Singapore, Malaysia, Vietnam and Thailand.
While he did not specify how much the realty platform has set aside for M&A, he said the firm is likely to raise external capital over the next 12 months to fund some of these acquisitions.
“I’ll be quite happy to share [how much is being set aside for M&A] if I had a figure, but it’s literally zero to several hundred million dollars depending on the opportunity. We can now do that because we are large enough to absorb those things. But it has to make sense and be consistent with the mission,” said Krishnan.
Over the next year, PropertyGuru will be homing in on mortgage fintech as it plans to build a “mortgage marketplace” in the near future, and potentially provide home financing solutions to property seekers.
The company is also eyeing data firms that can curate and analyse property data, as well as B2B enterprise software firms that can digitise its products across its five ASEAN markets.
According to Krishnan, the capital that PropertyGuru has raised so far is still “far from sufficient” to facilitate its ambitions.
“All the capital we raised from KKR went to M&A. Some of it went to Batdongsan and there’s still some money left. This can be used for our fintech plans, which will definitely have to be inorganic growth because we’ve never done anything like it in the past,” said Krishnan.
Last year, PropertyGuru fully acquired Batdongsan, one of Vietnam’s top real estate players, following its $145-million (S$200 million) Series D funding round led by private equity firm KKR.
In 2015, it had acquired Indonesia’s RumahDijual and ePropertyTrack after raising $129 million (S$175 million) from an investor consortium that included Emtek Group, Indonesia’s largest media group.
A number of these investors are on PropertyGuru’s board today. According to Krishnan, the company’s top shareholders are KKR, TPG, Emtek Group and Square Peg Capital.
PropertyGuru claims to be making a profit in a sector where it occupies a sizeable 55 per cent regional market share. Krishnan said that the company has been generating profits for more than one year and continues to remain cash flow positive.
Most of its technology peers in Southeast Asia such as Grab, GOJEK and Bukalapak are still deeply locked in a costly customer acquisition battle, which tends to put pressure on their balance sheets.
There have been talks of a PropertyGuru IPO on the anvil for some time. Krishnan says that the company continues to have conversations with its stakeholders for a public listing but declined to provide a timeline for it.
“I think IPO is an option every year. PropertyGuru looked at this back in 2014, and every year, there has either been a reason not to do it or to raise capital in the private markets for various reasons. The valuation is either better, or people understand your value proposition better, the market conditions are right and so on,” said Krishnan.