PropertyGuru SPAC merger with Richard Li-backed Bridgetown 2 Holdings

PropertyGuru SPAC merger with Richard Li-backed Bridgetown 2 Holdings

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

Nicky Loh | Bloomberg | Getty Pictures

Southeast Asia’s on-line actual property firm PropertyGuru plans to make use of proceeds from its public market debut subsequent 12 months for mergers and acquisitions, its CEO Hari V. Krishnan informed CNBC.

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

SPACs — or particular function acquisition firms — elevate capital from public markets and use that money to merge with a personal firm, with the objective 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 contains $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 among 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 informed 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 instant plans to broaden into different markets.

The cope with Bridgetown 2 is ready for regulatory approvals from the U.S. Securities and Change Fee. Krishnan predicted PropertyGuru might 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 via a SPAC?

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 positive that we might go to the U.S., we weren’t locked in on SPAC because the mannequin, it grew to become far more about the place can we maximize the chance, the place can we maximize the potential to share our story with worthy traders?” he mentioned.

SPACs have steadily been attracting curiosity in Asia.

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

Seize, one among 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 line with Krishnan.

“I believe that separates us from a number of different firms which have gone public both via the SPAC route or who’re from our a part of the world,” he mentioned, 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 mentioned.

PropertyGuru’s present backers embody world 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 12 months 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 mentioned that as these choice shares have been transformed to peculiar shares, such honest worth losses “usually are not anticipated in future durations.”

Skyline of condominiums within the Grange Street space of Singapore on Could 8, 2021.

Wei Leng Tay | Bloomberg | Getty Pictures

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

The coronavirus pandemic is a serious headwind for the corporate and 2020 was a difficult 12 months, Krishnan mentioned. That was despite sky-high property prices in Singapore, one among PropertyGuru’s main markets.

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

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

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