iProperty to be sold for $534M in one of largest ever buyouts of Southeast Asian web firm

Patrick Grove’s face when he completes the acquisition.

iProperty is a pretty big fish as one of Southeast Asia’s leading online property portal businesses. Now, it announced it’s about to be bought by an even bigger fish – REA Group, a News Corp subsidiary which owns property sites in Australia, China, US, and Europe.

The deal is worth US$413 million, which is the value of the remaining shares REA will purchase to complete the acquisition. This puts iProperty’s valuation at A$751 million (US$534 million), one of the largest acquisitions of a Southeast Asian internet company in recent memory.

It’s uncertain how the purchase will be structured, though REA will either buy A$4 (US$2.80) per share from iProperty shareholders, or offer each of them A$1.20 (US$0.85) per share in cash and 0.7 shares.

For shareholders who bought in right after iProperty’s initial public offering, they’d make a nice 17x return, assuming they get A$4 per share. REA previously had a bite of iProperty, investing US$100 million into the group.

iProperty booked A$24.8 million (US$17.7 million) in revenue in the first three quarters of this year, though it saw a net loss after tax of A$1.55 million (US$1.11 million) in the first half.

The acquisition would mark a complete exit for Patrick Grove and his Catcha Group, which remains the largest shareholder in the company. Not a bad result at all for Patrick, it seems. The largest exit to date was jobs portal Jobstreet, also from Malaysia, which got bought for US$586 million.

Two-horse race in a multi-front war

Steve Melhuish, CEO of PropertyGuru.

With the valuation for iProperty set, all eyes now turn to PropertyGuru, perhaps iProperty’s fiercest competitor in Southeast Asia. PropertyGuru is the market leader in Singapore. According to SimilarWeb, it also leads iProperty in Indonesia and Thailand in terms of traffic, though iProperty has the edge in Malaysia. PropertyGuru claims to have more than 10 million monthly users – over iProperty’s 4 million.

Of course, as a private company, PropertyGuru’s performance is opaque. However, public documents reveal that its valuation is around S$481 million (US$344 million). Its latest investor, private equity firm TPG, now holds a sizeable 36 percent of the business. An initial public offering is apparently in the works for next year, and we’ll see how PropertyGuru stands up to public scrutiny then.

For younger players like 99.co, Hipflat, and Lamudi, iProperty’s buyout signals a healthy demand for online property search services in Southeast Asia. Half a billion ain’t bad. But that’s assuming they can even get to that stage, which hinge on whether these companies offer anything of real value and whether competitors can replicate them.

Consolidation is already happening, with iProperty acquiring Thailand’s ThinkOfLiving to compete against PropertyGuru’s DDProperty. Singapore’s 99.co can angle for a similar exit if it can build itself into a viable alternative to PropertyGuru. iProperty can, for example, swoop in and purchase 99.co to instantly compete with its rival in the island-state.

For the Southeast Asian startup scene as a whole, the buyout is good news. If the region can keep up its momentum, we should see billion-dollar exits soon. Companies like Garena and GrabTaxi, for example, are already worth well over a billion dollars.