BackPropTiger, Housing.com to merge in all-stock deal worth $70-75 million
PropTiger's merger with Housing.com takes the valuation of the new entity to close to $270-285 million
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New Delhi: News Corp.-backed real estate portal PropTiger said on Tuesday that Mumbai-based Housing.com will merge with it in an all stock deal, and that it will receive $50 million in fresh funds from News Corp.’s REA Group Ltd and $5 million from SoftBank Group.
The deal values the SoftBank-backed Housing, which has raised north of $120 million since 2012, at about $70-$75 million, according to two people familiar with the development. PropTiger Reality Pvt. Ltd was valued at $200-$210 million taking the stock swap ratio to about 3:1, the people said. This takes the valuation of PropTiger after the merger to close to $270-$285 million. Existing investors in Housing will be given stake in PropTiger’s Singapore entity. Horizon Ventures, an existing investor in PropTiger is likely to exit.
Both companies declined comment on the specifics of the deal.
Housing.com’s chief executive Jason Kothari has quit with immediate effect and PropTiger will continue to be run by co-founder and chief executive Dhruv Agarwala. Kothari will join as an advisor to the new entity through the end of February 2017, the companies said.
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The deal finally puts an end to the six month-long exercise by the Mumbai-based Locon Solutions Pvt. Ltd (the company behind Housing) and its lead investor SoftBank to find a suitable investor or buyer. According to Agarwala, PropTiger will retain the Housing.com brand. “We intend to retain all the employees at Housing and PropTiger, and there will be minimal impact on headcount during organizational integration," he said in a call. “The joint entity will be the only player in India offering the full range of online and offline services in the real estate space, such as personalized search, virtual viewing, site visits, legal and financial diligence, negotiations, property registration, home loans and post- sales service," the two companies said in a joint statement.
Housing.com is primarily an online leads generator while PropTiger has on-ground staff who help the potential customer see the property, aid in paper work and ultimately close the deal.
According to Agarwala, PropTiger and Housing will now target the real estate advertising and transaction services market, which is currently worth $5 billion and expected to grow to $7 billion by 2020. Housing.com is also backed by Helion Venture Partners, Nexus Venture Partners and Qualcomm Ventures.
REA Group is one of the largest digital real estate firms globally with businesses across Australia, Asia, the US and Europe. It is the largest player in Australia with over 60% marketshare. The company owns a significant stake in Realtor.com, the second largest firm in the US.
Housing.com was started in 2012 by Rahul Yadav along with nine other co-founders as rental portal. It raised $38 million over two tranches in 2014, before raising a bumper $100 million round from SoftBank in November that year.
Soon after, things started to go sour as the real estate market slumped even as the company spent exuberant amounts in salaries and in general operations. Around this time, there was also disagreement over the focus of the company at the top management level, which was followed by a public spat between the investors and Rahul Yadav that ultimately led to his ouster. The company also down-sized its workforce in three rounds, which brought the total employee count from 2,500 at its peak in June 2015 to about 1,000 currently. In late 2015, SoftBank brought in Kothari to lead the company. Kothari moved the company’s focus to buying and selling and closed down the rental business. The rental business was however restarted late last year.
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