PropertyGuru Group To Be Acquired by EQT Private Capital Asia for $1.1 Billion

PropertyGuru Group has announced it is set to be taken private after agreeing to be wholly acquired by investment firm EQT Private Capital Asia (Hong Kong) for an all-cash consideration of USD 1.1 billion.

PropertyGuru's Board of Directors unanimously supported the merger, which is expected to close in Q4 2024 or Q1 2025.

The offer, which became public news this morning, represents a 52% premium to PropertyGuru’s closing share price on May 21, 2024, the last unaffected trading day prior to media speculation regarding a potential transaction, and a 75% and 86% premium to the Company’s 30-day and 90-day volume-weighted average share price, respectively, for the period ending May 21, 2024.

Hari V. Krishnan, Group CEO, said:

"We are pleased to embark on this new chapter with EQT. This partnership follows years of transformative growth, supported by TPG and KKR, which has established us as Southeast Asia’s leading PropTech platform. As we continue to innovate and deliver value to our consumers, customers, and stakeholders across the region, EQT’s global expertise in building marketplaces and commitment to sustainable growth will further strengthen our vision to power communities to live, work, and thrive in tomorrow's cities."

Janice Leow, Partner in the EQT Private Capital Asia advisory team and Head of EQT Private Capital Southeast Asia, said:

"PropertyGuru has firmly established itself as the leading property marketplace platform in Southeast Asia, and we are deeply impressed by the strong foundation it has built over the past 17 years as well as with its talented team.

"We believe our offer provides shareholders with compelling value and certainty, while strategically positioning PropertyGuru to fully harness its long-term growth potential.

"With EQT's significant experience in the technology, online classifieds and marketplace sectors, we aim to further strengthen PropertyGuru's platform, driving enhanced innovation and deeper engagement with its consumers, customers and stakeholders.”

What is the background of PropertyGuru Group?

PropertyGuru.com.sg was launched in Singapore in 2007 and has become one of the biggest names in Asia's real estate marketplace industry.

Today, PropertyGuru owns and operates leading real estate marketplaces in Singapore, Vietnam, Malaysia and Thailand as well as a financial services division.

However, this chart only tells half a story. Despite healthy revenue growth in previous quarters and full years, the Group has continued to record net losses since its flotation in 2022—the group lost S$6.3 million (USD 4.7 million) in its Q1 2024 financial results released earlier this year.

Who is EQT Private Capital Asia?

EQT is a fairly young investment firm having been formed in 2022 when EQT acquired Baring Private Equity Asia in a $7.5 billion deal.

Interestingly, EQT AB—a Swedish investment firm founded in 1997 and primarily led by EQT Private Capital Asia—only yesterday announced plans to raise $12.5 billion for its next Asia fund a 12% increase on the $11.2 billion it raised for its previous fund two years ago. EQT is also the former owner of  idealista having sold its shares in the Spanish-headquartered portal player to Civen in a €2.9 billion deal in June.

Why is PropertyGuru Group going private?

A privatisation deal had been rumoured for some time, but the Group's willingness to go private after just two years on the stock market might be a surprise to some.

It's impossible to tell what conversations have been taking place behind closed doors, but a company going public in 2022 and then being taken back private in 2024 doesn't look like part of a master plan.

Commenting on the news, Simon Baker, industry veteran and founder of Online Marketplaces, said:

"In March 2022 PropertyGuru listed on the New York Stock Exchange via the Bridgetown 2 SPAC. The initial valuation was USD 1.8 billion. Two years later, in March this year, the market cap had dropped by 70 percent to around USD 500m making PropertyGuru a very attractive target for PE firms. It was around this time that speculation began and the share price moved up.

"The sale of PropertyGuru for USD 1.1 billion, while a 40 percent discount on its listing valuation, is probably a fair price given the performance of the business as it represents 7 times revenue. The year-on-year growth in revenues was just 11 percent and it is still loss making on an EPS (earnings per share) basis.

"Part of its poor market performance can be attributed to missing projected revenue increases. As part of the de-SPAC process, it was reported that revenues were projected to grow 44% in 2022 and 30% in 2023. In reality, the growth was 35% in 2022 and just 10% in 2023. Missing forecasts can be the “kiss of death” to a business as once the market loses confidence in a business, it is hard to regain its trust.

"Taking the business private will allow EQT to revamp operations, cut costs where needed, focus growth on where there is real value (e.g. not Indonesia), and execute all of this outside the gaze of the public market.

"Can EQT build a SE Asian business that has a valuation of USD 2 billion or more over the next 3-5 years to justify its purchase price? This will be an easy challenge."