MSPEA buys control of Singapore-listed APAC Realty

It picked up 212.3m shares – or a 59.8% interest – for SGD 0.61 apiece, according to a filing. This triggered a mandatory general offer for the remaining shares. MSPEA is willing to pay SGD 0.57 per share in cash.

The SDG 0.61 price represents a 25% discount to the April 22 closing price. The stock, which gained nearly 6% in the week prior to the announcement, closed on SGD 0.80 on April 25, down 1.2%. The company has a market capitalisation of approximately SGD 290m.

APAC Realty holds the regional master franchise rights for the ERA brand across 17 markets in Asia Pacific. Through this franchise network, it claims more than 20,000 advisors across 653 offices. The company directly owns ERA Realty Network, one of Singapore’s largest real estate agencies.

Northstar initially acquired the Singapore franchise only, reportedly paying SGD 100m to support a management buyout that separated the business from its parent, Hersing Corporation, in 2013. Later the same year, the private equity firm bought the Asia Pacific master franchise right from Hersing. The footprint covered Australia, Japan, China, and Indonesia, among other countries and territories.

APAC Realty went public in 2017, raising SGD 32.2m through the sale of 48.9m shares at SGD 0.66 apiece. Northstar held a 72% stake in the business at time of IPO.

The company generates revenue from the sell-side, charging fees and taking sales commissions from property developers, sellers, agents, and landlords. It also receives royalty payments from franchisee partners. Services cover primary home sales, secondary home sales, rentals, capital markets and investment, and auctions.

Singapore is the largest part of the business, with 8,432 advisors as of year-end 2021. Indonesia came next with 4,591 advisors, followed by Vietnam with 2,914 and Japan with 1,655. Revenue reached SGD 739.8m for the year, up from SGD 395.1m in 2020. Over the same period, gross profit rose 58.7% year-on-year to SGD 75.4m, while net profit increased 116% to SGD 35.3m.

Nearly 90% of gross profit comes from brokerage services, with the rest generated through activities such as training, property valuation, rentals, and merchandise sales.

“APAC Realty is one of a limited number of real estate brokerages with true Asia Pacific brand recognition and footprint. MSPEA will help to further build on this solid foundation and support APAC Realty’s growth by leveraging our global network and extensive experience of growing businesses across Asia,” said Andrew Hawkyard, co-CIO of MSPEA, in a statement.

The private equity firm is investing in APAC Realty through its fifth Asia fund. No final close has been announced. The most recent regulatory filing, dated March, indicated that USD 395.8m had been raised. A source close to the situation told AVCJ in 2020 that a final close of sub-USD 1bn was expected by the end of that year.

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• Topics
• Southeast Asia
• Real estate
• Support services
• Buyouts
• Trade sale
• Singapore
• Real estate
• Morgan Stanley Private Equity Asia
• Northstar Group