Hari Krishnan, chief government officer of Singapore-based start-up PropertyGuru.
Nicky Loh | Bloomberg | Getty Photographs
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 instructed CNBC.
The beginning-up — which operates in Singapore, Malaysia, Thailand, Vietnam and Indonesia — introduced 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 objective acquisition firms — elevate capital from public markets and use that money to merge with a personal 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, in response to the corporate. The deal contains $100 million of personal placement from funding administration companies 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 will likely be on the steadiness sheet on the finish of this enterprise mixture settlement will likely be very a lot in direction of M&A,” Krishnan instructed CNBC in an interview final week. “And I might say largely targeted on knowledge, software program, dwelling providers and fintech.”
In August, PropertyGuru acquired REA Group’s Malaysia and Thailand property portal companies.
Krishnan dominated out any speedy plans to broaden into different markets.
The take care of Bridgetown 2 is ready for regulatory approvals from the U.S. Securities and Change Fee. Krishnan predicted PropertyGuru may commerce on the New York Inventory Change 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?
PropertyGuru thought of all choices and all inventory exchanges earlier than inking the take care of Bridgetown 2, which included making an attempt for a conventional IPO once more, Krishnan stated.
In 2019, the Singapore head-quartered firm scrapped plans for an preliminary public providing on the Australian securities alternate as a result of “market circumstances weren’t perfect.” With Bridgetown 2, it was extra about discovering the precise companion, in response to Krishnan.
We really feel we’re a compelling funding and clearly, time will inform whether or not traders 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 turned way more about the place can we maximize the chance, the place can we maximize the potential to share our story with worthy traders?” he stated.
SPACs have steadily been attracting curiosity in Asia.
Whereas personal firms see them as a non-traditional option to entry the capital market, a rising variety of Asia-based sponsors are additionally backing these blank-check entities.
Seize, one in every of Southeast Asia’s most distinguished start-ups, began buying and selling as a publicly listed firm on the Nasdaq on Dec. 2, after it merged with the blank-check firm, Altimeter Progress 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, in response to Krishnan.
“I believe that separates us from a variety of different firms 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 traders agree,” Krishnan stated.
PropertyGuru’s current backers embody world funding companies TPG Capital and KKR.
In a regulatory submitting, 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 honest worth loss on choice share conversion choices. The corporate stated that as these choice shares have been transformed to bizarre shares, such honest worth losses “are usually not anticipated in future durations.”
Skyline of condominiums within the Grange Highway space of Singapore on Could 8, 2021.
Wei Leng Tay | Bloomberg | Getty Photographs
It additionally reported a close to 18% bounce in income 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 regardless of sky-high property costs in Singapore, one in every of PropertyGuru’s main markets.
However the firm is betting on a number of key, long-term macroeconomic developments in Southeast Asia — similar to urbanization, digitization, and the emergence of the center class. “These are developments 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 knowledge software program providers, with an general whole addressable market at roughly $8 billion, he added.