Merger of PropertyGuru SPAC with Bridgetown 2 Holdings, supported by Richard Li


Hari Krishnan, CEO of Singaporean start-up PropertyGuru.

Nicky Loh | Bloomberg | Getty Images

Southeast Asian online real estate firm PropertyGuru plans to use the proceeds from its public market debut next year for mergers and acquisitions, CEO Hari V. Krishnan told CNBC.

The start-up – which operates in Singapore, Malaysia, Thailand, Vietnam and Indonesia – announced plans in July to go public through a SPAC merger with Bridgetown 2 Holdings, a blank check company backed by billionaires Richard Li and Peter Thiel.

SPACs – or special purpose acquisition companies – raise capital on public markets and use that money to merge with a private company, with the aim of making the company public within two years.

The Bridgetown 2 and PropertyGuru merger company is expected to have a market value of around $ 1.78 billion, according to the company. The deal includes $ 100 million of private placement from investment management firms like Britain’s Baillie Gifford and Naya Capital, Australian group REA, New York-based Akaris Global Partners as well as one of the world’s largest managers. assets of Malaysia.

“Much of this money that will appear on the balance sheet at the end of this business combination deal will go to mergers and acquisitions,” Krishnan told CNBC in an interview last week. “And I would say largely focused on data, software, home services, and fintech.”

In August, PropertyGuru acquired REA Group’s real estate portal business in Malaysia and Thailand.

Krishnan has ruled out any immediate plans to expand into other markets.

The deal with Bridgetown 2 is awaiting regulatory approvals from the United States Securities and Exchange Commission. Krishnan predicted that PropertyGuru could trade on the New York Stock Exchange towards the end of the January-March quarter once the deal is closed.

Shares of Bridgetown 2 Holdings have fallen more than 23% since it debuted in the market in January.

Why via a SPAC?

PropertyGuru looked at all options and stock exchanges before closing the deal with Bridgetown 2, which included attempting a traditional IPO again, Krishnan said.

In 2019, the company headquartered in Singapore plans abandoned for an IPO on the Australian stock exchange because “the market conditions were not ideal”. With Bridgetown 2, it was more about finding the right partner, according to Krishnan.

We think we are a worthwhile investment and obviously time will tell if investors agree.

Hari Krishnan

CEO, PropertyGuru

“We weren’t sure we were going to the United States, we weren’t locked into PSPC as a model, it was more about where to maximize the opportunities, where to maximize the potential to share our story with worthy investors. of that name. ?” he said.

After-sales service regularly arouses interest in Asia.

While private companies see them as a non-traditional way to access the capital market, a growing number of Asian-based sponsors are also supporting these blank check entities.

Grab, one of Southeast Asia’s largest startups, began operations as a Nasdaq-listed company on December 2, following its merger with blank check firm, Altimeter Growth Corp. merger operations and have been down 45% since then.

Overcome investor scrutiny

PropertyGuru’s “tried and tested” business model, its 14-year history and the company’s economic fundamentals will be able to stand up to scrutiny from investors once it is publicly traded, according to Krishnan.

“I think that separates us from a lot of other companies that have gone public either through PSPC or our part of the world,” he said, adding that the company had a comparatively market valuation. cautious compared to its rated peers.

“We think we are a worthwhile investment and obviously time will tell if investors agree,” Krishnan said.

PropertyGuru’s existing backers include global investment firms TPG Capital and KKR.

In a regulatory file, the company reported a net loss of S $ 14.4 million (about $ 10.56 million) last year and a net loss of S $ 38.5 million in 2019.

For the six months ending in June, PropertyGuru reported a net loss of S $ 150.6 million and attributed most of it to the fair value impairment on preferred stock conversion options. The company said these preferred shares having been converted to common stock, such fair value losses “are not expected in future periods.”

Skyline of condominiums in the Grange Road district of Singapore on May 8, 2021.

Wei Leng Tay | Bloomberg | Getty Images

He also reported a nearly 18% increase in income to S $ 42.9 million for the same period.

The coronavirus pandemic is a major headwind for the business and 2020 has been a difficult year, Krishnan said. It was despite high property prices in Singapore, one of PropertyGuru’s main markets.

But the company is betting on a few key long-term macroeconomic trends in Southeast Asia, such as urbanization, digitalization and the emergence of the middle class. “These are trends that are not going to change. They can be stopped, but they cannot be stopped,” Krishnan said.

PropertyGuru has grown beyond real estate markets and into fintech and data software services, with a total addressable market of around $ 8 billion, he added.

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