IPO expectations low for PropertyGuru

The Singapore skyline. Picture: iStock

PropertyGuru is shaping up to price at the bottom end of the range for its IPO after the company launched its bookbuild on Tuesday.

The Singapore online real estate listings business told fund managers it had received retail broker bids and early-order indications from institutional investors before the formal opening of the bookbuild that were in excess of the deal size at the bottom end of the price range.

The company said institutional price sensitivity was focused on the bottom end of the price range, with a number of indications above that level.

PropertyGuru, advised by Credit Suisse, UBS, Ord Minnett and Morgans, is selling shares at between $3.70 and $4.50 as it looks to raise between $345m and $380m. The raise takes its market value to between $1.2bn and $1.4bn, with the company to be priced on Thursday ahead of a listing on Friday.

The IPO range equates to between nine and 10.9 times the company’s forecast revenue, and some had described the group as overpriced, so the result of the bookbuild will be interesting.

However, the expectation among some late last week was that the business would find support from some investors who took comfort from the fact that private equity shareholders, including Kohlberg Kravis Roberts and TPG Capital, were retaining their stake in the company.

PropertyGuru’s backers also include the Paul Bassat-backed venture capital firm Square Peg Capital. While PropertyGuru generates most of its income in Singapore, it is also expanding operations across Malaysia, Thailand and Vietnam.

Mr Bassat, the co-founder of Seek, will stay on the board of PropertyGuru, which includes the former HelloWorld CFO Jennifer Macdonald and former retail executive Melanie Wilson as directors.

The bulk of the tech company’s revenue is from real estate agents, subscription and listing fees. Over time it also aims to move into the mortgage finance market.

In Singapore the company is expected to face competition from iProperty, which is owned by the ASX-listed property listings major REA Group. News Corp, publisher of The Australian, has a majority stake in REA.