REA Group takes control of India’s Elara

REA Group is lifting its stake in Indian real estate advertiser Elara in a cash-and-scrip deal worth up to $99m.

Owen Wilson, REA Group chief executive.

Listed online real estate company REA Group has teamed with News Corp to forge deeper into India’s burgeoning property market in a $US70m ($99m) deal.

The transaction will see REA boost its stake in Indian real estate advertiser Elara via a cash-and-scrip deal that will add to the group’s international operations, which already include businesses in Asia and a stake in a United States portal.

REA will lift its interest in Elara to between 47.2 per cent and 61.1 per cent, from its current 13.5 per cent holding. It said it will pay $US34.5m in cash and the balance in REA shares.

Under the deal, News Corp’s shareholding in Elara will also increase from 22.1 per cent to 38.9 per cent.

REA will hold five out of nine Elara board seats.

REA said the business ran India’s fastest growing digital real estate business in terms of audience, under the Housing.com, PropTiger.com and Makaan.com brands.

Since REA’s initial investment in Elara in 2017 the business has delivered strong revenue growth at a compound average growth rate of 42 per cent from fiscal 2017 to fiscal 2020.

REA cautioned that fiscal 2021 revenues in India were likely to be “negatively impacted” by the continuing effects of COVID-19, and the duration of the pandemic’s impact remains uncertain.

But Elara’s audience levels continue to reach record highs and listing volumes have rebounded from the COVID-19 lows in June, albeit at lower levels than before the pandemic.

Market share also increased during the coronavirus period and grew fiscal 2020 revenue by 9 per cent to $27m.

“With over 700 million internet users and roughly half a billion yet to come online, our increased investment in Elara will allow REA to be at the forefront of the considerable long-term opportunities within India,” REA chief executive Owen Wilson said.

“The Indian economy is the fastest growing trillion dollar economy in the world,” he said, adding it had a growing middle class, which was buying more property. “We’re seeing a huge expansion of the number of properties but also the valuations of properties.”

Mr Wilson unveiled ambitions for Elara to be the top property portal in India, which would be a “very valuable” asset for the business.

“We’re very confident that in a post COVID-19 world this sector is going to be very strong,” Mr Wilson said. REA also has businesses in Hong Kong, Thailand, Indonesia, and Malaysia, where it has a dominant position.

Mr Wilson said the Indian business was located just outside Delhi in the “Silicon Valley of India” and REA would look to share knowledge across its existing units.

REA is 62 per cent owned by News Corp, publisher of The Australian. REA shares dipped $1.48, or 1.2 per cent, to $122.86, against a 1.6 per cent downturn in the broader market.