Singapore’s PropertyGuru units its sights on mergers and acquisitions after its deliberate SPAC itemizing


Hari Krishnan, chief government officer of Singapore-based start-up PropertyGuru.

Nicky Loh | Bloomberg | Getty Photos

Southeast Asia’s on-line actual property firm PropertyGuru plans to make use of proceeds from its public market debut subsequent yr for mergers and acquisitions, its CEO Hari V. Krishnan advised CNBC.

The beginning-up — which operates in Singapore, Malaysia, Thailand, Vietnam and Indonesia — announced plans in July to go public by way of a SPAC merger with Bridgetown 2 Holdings, a blank-check firm backed by billionaires Richard Li and Peter Thiel.

SPACs — or particular function acquisition corporations — elevate capital from public markets and use that money to merge with a non-public firm, with the aim of taking the corporate public inside a two-year interval.

The mixed firm from the merger between Bridgetown 2 and PropertyGuru is ready to have a market worth of round $1.78 billion, according to the company. The deal consists of $100 million of personal placement from funding administration corporations just like the UK’s Baillie Gifford and Naya Capital, Australia’s REA Group, New York-based Akaris World Companions in addition to one in every of Malaysia’s largest asset managers.

“That cash that shall be on the steadiness sheet on the finish of this enterprise mixture settlement shall be very a lot in the direction of M&A,” Krishnan advised CNBC in an interview final week. “And I’d say largely targeted on information, software program, dwelling providers and fintech.”

In August, PropertyGuru acquired REA Group’s Malaysia and Thailand property portal companies.

Krishnan dominated out any quick plans to develop into different markets.

The cope with Bridgetown 2 is ready for regulatory approvals from the U.S. Securities and Trade Fee. Krishnan predicted PropertyGuru may commerce on the New York Inventory Trade close to the tail finish of the January-March quarter as soon as the deal is accomplished.

Bridgetown 2 Holdings shares are down greater than 23% since its market debut in January.

Why by way of a SPAC?

We really feel we’re a compelling funding and clearly, time will inform whether or not buyers agree.

Hari Krishnan

CEO, PropertyGuru

“We weren’t certain that we’d go to the U.S., we weren’t locked in on SPAC because the mannequin, it grew to become rather more about the place can we maximize the chance, the place can we maximize the potential to share our story with worthy buyers?” he stated.

SPACs have steadily been attracting interest in Asia.

Whereas personal corporations see them as a non-traditional strategy to entry the capital market, a rising variety of Asia-based sponsors are additionally backing these blank-check entities.

Grab, one in every of Southeast Asia’s most outstanding start-ups, started trading as a publicly listed company on the Nasdaq on Dec. 2, after it merged with the blank-check firm, Altimeter Development Corp. Shares tumbled on the primary day of post-merger buying and selling and are down 45% since then.

Overcoming investor scrutiny

PropertyGuru’s “tried-and-tested” enterprise mannequin, its 14-year historical past, and the corporate’s financial fundamentals will have the ability to stand as much as investor scrutiny as soon as it trades within the public market, based on Krishnan.

“I believe that separates us from loads of different corporations which have gone public both by way of the SPAC route or who’re from our a part of the world,” he stated, including that the enterprise has a relatively conservative market valuation than its listed friends.

“We really feel we’re a compelling funding and clearly, time will inform whether or not buyers agree,” Krishnan stated.

PropertyGuru’s present backers embody international funding corporations TPG Capital and KKR.

In a regulatory filing, the corporate reported a web lack of 14.4 million Singapore {dollars} (about $10.56 million) final yr and a web lack of 38.5 million Singapore {dollars} in 2019.

For the six months ending in June, PropertyGuru reported a web lack of 150.6 million Singapore {dollars} and attributed most of it to truthful worth loss on choice share conversion choices. The corporate stated that as these choice shares have been transformed to odd shares, such truthful worth losses “aren’t anticipated in future intervals.”

Skyline of condominiums within the Grange Highway space of Singapore on Might 8, 2021.

Wei Leng Tay | Bloomberg | Getty Photos

It additionally reported a near 18% jump in revenue to 42.9 million Singapore {dollars} for a similar interval.

The coronavirus pandemic is a significant headwind for the corporate and 2020 was a difficult yr, Krishnan stated. That was despite sky-high property prices in Singapore, one in every of PropertyGuru’s main markets.

However the firm is betting on a number of key, long-term macroeconomic traits in Southeast Asia — comparable to urbanization, digitization, and the emergence of the center class. “These are traits that aren’t going to alter. They are often paused, however they can’t be stopped,” Krishnan stated.

PropertyGuru has been increasing past property marketplaces, and into fintech and information software program providers, with an general complete addressable market at roughly $8 billion, he added.