REA to bank a $150m gain on the sale of its PropertyGuru stake

ASX-listed real estate listing giant REA Group will focus on India and US after selling out of Southeast Asian markets to a private equity firm.

REA Group chief executive Owen Wilson. Picture: Jane Dempster

Online listing company REA Group has exited its stake in Southeast Asian property portal PropertyGuru Group as the company was sold to Swedish private equity firm EQT in a deal worth about $US1.1bn.

PropertyGuru said it had entered into a definitive agreement to transfer ownership of PropertyGuru to affiliates of the EQT-run BPEA Private Equity Fund VIII for $US6.70 per share.

The deal will result in REA divesting its 17.2 per cent stake in PropertyGuru at a hefty premium to book value. It spent years building up businesses in Asia and merged them into PropertyGuru which was then listed on the NYSE.

The transaction follows a competitive process run by a special committee of the PropertyGuru board after the major shareholders, private equity groups TPG and KKR, that collectively hold more than 56 per cent of PropertyGuru shares, told the company of their intention to realise their investment.

REA Group chief executive Owen Wilson said that the company had looked at an acquisition but said the offer made for the company was compelling.

“EQT’s offer represents a compelling price. We wish the PropertyGuru management team well as the business takes its next steps under new ownership,” he said.

Mr Wilson said REA had known that the private equity investors in PropertyGuru would want to exit and there were reports of their plans earlier this year. While it assessed an acquisition, the EQT bid emerged at a higher valuation than REA put on the company.

Mr Wilson cited the company’s track record in profitably selling stakes in offshore businesses, noting it had previously sold businesses in Luxembourg and Italy.

“We’ve got a track record of when we get a compelling offer on a business, then we are prepared to take the value for our shareholders,” he said.

The company is committed to growing its offshore business in India and the United States. India in particular is considered a major growth engine for the company.

“Our global growth strategy remains focused on our Indian business which has significant momentum and represents an outstanding opportunity,” Mr Wilson said.

REA expects to receive approximately $286m from the sale. The investment in PropertyGuru currently has a net carrying value of $136m, and therefore a non-core gain on completion of approximately $150m will be recorded in the 2025 financial year.

The acquisition of PropertyGuru by EQT is subject to customary closing conditions including approval by PropertyGuru’s shareholders and receipt of regulatory approvals. PropertyGuru has stated that the transaction is expected to close in the second or third quarter of this financial year

Once complete, the deal will leave REA cashed up and able to consider further growth options.

“We’ve always looked at inorganic opportunities; I don’t think there’s been a year where we haven’t made an acquisition,” Mr Wilson said, noting it would give the company a “great deal of flexibility”.

PropertyGuru is billed as the leading proptech company in Southeast Asia and is the preferred destination for more than 28 million property seekers to connect with over 46,000 agents a month.

In 2021, REA’s Asian operation was bolstered by plans to list PropertyGuru in the US.

The locally listed group, controlled by News Corp, publisher of The Weekend Australian, had struck a deal to combine its Malaysian and Thai businesses with one-time rival PropertyGuru and take a stake in the enlarged Asian-based property platform.

REA emerged with a minority interest in PropertyGuru, which is the market leader in Southeast Asia and is strongest in Singapore, Vietnam and Malaysia, and Thailand where the two companies had been competitors.

REA last week said Australia’s residential property market was in a healthy state, with strong demand across the nation being driven by high levels of employment and immigration, as it turned in a 24 per cent lift in full-year underlying profit to $461m.

The company said the supply of homes for sale was also strong and sellers were confident with the level of demand, and that properties on the market were selling quickly – well below the six-year average on its market-leading realestate.com.au site.