Market muses over Nine taking Domain private

Domain was always what the private equity firms were after within Fairfax. Picture: John Appleyard

Could Nine Entertainment be looking to privatise Domain Group — the real estate website that it recently acquired as part of its takeover of Fairfax Media?

Not according to the official line from Nine, but it does not mean such a possibility is not something up for discussion in the future.

The potential move has created much discussion in the market.

Nine purchased Fairfax in the past year in a transaction at the time worth about $2.1 billion and the Fairfax assets are well on the way to being integrated into the overall operations of the free-to-air broadcaster.

$3.17 Domain shares closed down 10¢ q

But before that, Fairfax was the subject of a takeover target by private equity firms Hellman & Friedman and TPG Capital.

Domain at that time sat within Fairfax, but following the private equity approaches that never resulting in any binding deals, Domain was demerged on the Australian Securities Exchange in 2017, with Fairfax retaining 60 per cent in what was seen partly as a defensive move. That stake is now owned by Nine.

Domain was always what the private equity firms were after within Fairfax and was considered the crown jewel.

$3.17 Domain shares closed down 10¢ q

But following Nine’s acquisition of the newspaper publisher, which counts The Age, Sydney Morning Herald and Australian Financial Review among its titles, the thinking is that there is no need for Domain to be separately listed.

As a result, some are wondering whether Nine will move to buy the stake in Domain it does not already own and delist the business.

$3.17 Domain shares closed down 10¢ q

Hellman & Friedman owns 10 per cent of Domain, so perhaps it works on a deal with Nine to buy out other shareholders at a time when the market value is worth $1.9bn.

Domain is considered lucrative due to the shift of real estate advertising from newspapers to online platforms. Other similar businesses in the space have caught the eye of private equity.

Last year, New Zealand online marketplace Trade Me, which was previously owned by Fairfax, was sold to US private equity firm Apax Partners for $2.4bn, after Fairfax bought the operation in 2006 for $NZ700 million.