
PropertyGuru completes SPAC merger, trades flat

PropertyGuru, a private equity-backed Southeast Asia real estate portal, traded flat on its New York Stock Exchange debut following a merger with a special purpose acquisition company (SPAC) at an enterprise value of USD 1.36bn.
This is the second SPAC liquidity event for a Southeast Asian unicorn after ride-hailing platform turned super app Grab's USD 30.4bn merger last December. The stock hit USD 18 in anticipation of a deal and then fell below the USD 10 per share offering price post-consummation as investors redeemed their positions. It now trades around USD 4 with a market capitalisation of USD 15bn.
Bridgetown 2 Holdings, a SPAC launched by PayPal co-founder Peter Thiel and Richard Li, who controls Pacific Century Group and PineBridge Investments, agreed to merge with PropertyGuru in July 2021.
The stock began to drop in early March when it was announced that completion was imminent. It opened at USD 8.61 on March 18, fell as low as USD 7.79 during morning trading before ending the day at USD 8.60. This equated to a market capitalisation of USD 1.57bn.
"We will continue to invest in technology and expand our services and offerings to build on our leading positions in Singapore, Vietnam, Malaysia and Thailand," said Hari V. Krishnan, CEO of PropertyGuru, in a statement.
"Southeast Asia's real estate market is beginning to recover from the pandemic and as the region's increasingly affluent and digitally-enabled population moves to urban centres, PropertyGuru is well-positioned to benefit from these long-term trends."
Frost & Sullivan estimates PropertyGuru's addressable market is worth USD 8.1bn. The SPAC merger provides additional capital to pursue organic and strategic growth in the region. This was evidenced by the acquisition of the property technology assets of Australia-listed REA Group last year.
The company, which aborted an IPO in Australia in 2019, previously received several rounds of private funding. TPG and KKR were the biggest investors. Following the merger, they hold stakes of 32.1% and 28.7%, respectively, while REA owns 18.6%. These investors account for the bulk of the USD 1.35bn in rollover equity.
The original filing indicated that the overall equity would be USD 1.78bn and PropertyGuru would have balance sheet cash of USD 431m. These have been adjusted downwards to USD 1.61bn and USD 254m. This reflects a reduction in the SPAC investor contribution from USD 299m to USD 122m.
Consequently, the SPAC investors' post-merger ownership has fallen from 16.8% to 1.9%, according to an updated filing. The SPAC sponsor remains on 4.2%. The PIPE commitment is unchanged at USD 100m, but the holding has increased to 5.3% from 4.5%. This doesn't include REA's USD 32m contribution to the PIPE.
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 3.3m monthly listings and serves a community of over 52m property seekers and 57,000 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 generated SGD 100.7m (USD 74.3m) in revenue in 2021, up 22.7% year-on-year, and it expects to reach SGD 145.1m in 2022. In addition, it is on track to return to an adjusted EBITDA positive position in 2022.
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