KKR’s door was ajar for Domain Group

Domain Group is the second-largest player in the online realestate sector behind REA Group.

New York-based private equity firm Kohlberg Kravis Roberts is understood to have explored a buyout proposal for the $2bn Domain Group.

However, after carrying out an assessment of the online real estate business, it decided against moving forward with an acquisition, instead working together as a partner in its quest to buy Property Exchange Australia, which was up for sale at the time.

The understanding is that former Fairfax Media chief executive Greg Hywood worked as an adviser, while at the centre of the negotiations was Nine Entertainment’s longtime trusted investment banker, Michael Stock, who runs Jefferies Australia.

It was well publicised at the time that KKR and Domain were bidding together for PEXA, but were dashed after their $3bn-plus offer was overlooked for a sharemarket listing instead.

What is less known is that at the same time, KKR weighed a purchase of the Domain business and was offered sensitive financial information to assess a deal.

That was in 2021, when PEXA was listed with a $3.3bn enterprise value.

Domain Group is the second-largest player in the sector behind REA Group, which is 61 per cent owned by News Corp, publisher of The Australian.

There has been talk that Nine – a publisher, broadcaster and digital media business – is understood to be weighing a move to privatise Domain with help from private equity. It’s a possibility being thought through by Mr Stock, who is understood to be offering some assistance in the appointment of Nine’s next chief executive.

Taking Domain off the listed market could boost performance behind closed doors, without scrutiny.

Nine purchased Fairfax around 2018 in a transaction at the time worth about $2.1bn but before that, in response to Fairfax fielding private equity approaches, it demerged Domain to be a separately listed company and retained 60 per cent.

There’s been talk for years that a privatisation could be on the agenda.

Domain’s share price is at the same level it was four years ago when demerged after peaking in 2021 at over $5 amid the global pandemic.

In its latest results for the year to June, Domain reported a 13.1 per cent increase in revenue for the past financial year to $391.1m, while net profit increased by 27.9 per cent, excluding significant items, to $49.4m.

REA has outstripped its competitor Domain, majority owned by News Corp’s major rival, Nine Entertainment.

KKR has owned online real estate websites before, including a stake in Southeast Asian business Propertyguru, which it purchased in 2022.