Singapore's PropertyGuru set for $1.35b SPAC merger

The company received $220 million in funding from existing backers KKR and TPG Capital as recently as last September. This followed a failed attempt at an IPO in Australia. Earlier this year, PropertyGuru expanded its footprint through the acquisition of the property technology assets of Australia-listed REA Group. As part of the deal, REA got an 18% interest in PropertyGuru.

The SPAC, Bridgetown 2 Holdings, is the second launched by Thiel, co-founder of PayPal, Palantir Technologies and Founders Fund, and Li, who controls Pacific Century Group and PineBridge Investments. It raised $299 million on the New York Stock Exchange earlier this year to deploy in Southeast Asia tech.

SPAC investors will hold a 16.8% equity interest in the merged entity, while the SPAC sponsor – sponsors typically receive a 20% stake in the SPAC (not in the merged entity) for a nominal sum post-listing – will own 4.2%. PIPE investors, including Baillie Gifford, Naya, and Akaris Global Partners, will contribute $100 million for 4.5%, while REA is making a PIPE commitment of $32 million for 2.9%.

The bulk of the equity – $1.35 billion out of $1.78 billion – comes from existing investors in PropertyGuru who are rolling over their interests. At present, TPG, KKR, and REA own 38%, 34%, and 18%, respectively. They will roll over in full, but face dilution by the public market issuance. TPG will end up with 27.2%, KKR with 24.4%, and REA with 12.9%, excluding its 2.9% PIPE commitment.

The transaction, which values the company at 12.4x projected revenue for the 2022 calendar year, will create balance sheet cash of $393 million. It still needs to be approved by a majority of SPAC investors. On completion, they can redeem some or all their shares for cash.

Founded in 2007, PropertyGuru expanded into Malaysia, Indonesia, and Thailand in 2011 and added Vietnam five years later. It runs locally-focused portals in each market and has made numerous bolt-on acquisitions. The company currently has more than 2.8 million monthly listings and serves a community of 37 million property seekers and 49,000 active agents.

In addition to marketplace services, PropertyGuru provides digital marketing services for property agents and developers, a software-as-a-service (SaaS) platform for sales automation, a mortgage marketplace and brokerage, and assorted property data consultancy services.

The company’s existing management team, led by CEO Hari V. Krishnan and CFO Joe Dische, will remain in place after the merger.

“We have established a market leadership position in the Southeast Asian property ecosystem and a track record of revenue growth. Much of our success is the result of our investment in technology over the years and capturing strategic growth opportunities in recent times,” Krishnan said in a statement. “We have a story to be told and found the right partner to help us tell it to public market investors.”

PropertyGuru generated $61.9 million in revenue in 2020, down from $66.6 million the previous year. Almost all of it came from marketplace services, and Singapore alone was responsible for more than half. Over the same period, EBITDA fell from $9.4 million to $3.4 million, while the net loss narrowed from $29 million to $10.9 million, according to an investor presentation.

Revenue is projected to hit $222.6 million by 2025, with data and financial technology services contributing $28 million and the rest coming from marketplace services.

PropertyGuru is the second major Southeast Asia-focused internet company to agree on a SPAC merger. In April, ride-hailing and local services platform Grab said it would merge with a SPAC launched by Altimeter Capital at an enterprise valuation of $30.4 billion.

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• Topics
• Southeast Asia
• IPO
• Technology
• Real estate
• Singapore
• SPAC
• PineBridge Investments
• KKR
• TPG Capital