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PropTiger and Housing now combined, Newscorp-backed REA to invest $50Mn in the new Proptiger-run entity

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In line with our previous report, PropTiger has today officially announced merger with struggling real estate startup Housing.com in an all-stock deal. And while both have made it sound like a merger in official statements, the entire structure of the deal makes it clear that Proptiger is acquiring Housing, in an all-stock deal.

Lets go into the details of how that is the case.

First up, the join entity will see an investment of close to $55 Million, $50 Million of which will come from REA, a company which has 61% stake held by Newscorp, which again is the largest investor in Proptiger. The rest $5 Million will come from an affiliate of SoftBank Group, most likely as a token of appreciation for Newscorp, to have taken forward the deal. (or to make sure they send out PRs announcing this as a merger ?)

Secondly, the joint entity will have Proptiger’s current CEO, Dhruv Agarwala as the CEO, with Housing.com CEO and Softbank’s rep Jason Kothari, deciding to move on to pursue other opportunities in the Indian Internet space.

There’s more to this. According to multiple, credible reports (and our own sources), the deal values Housing at about $70-$75 million (almost half of the total funds they have raised so far) while PropTiger was valued at $200-$210 million dollars, taking the stock swap ratio to about 3:1. This makes the valuation of the new entity close to $270-$285 million.

Commenting on the investment, REA Group CEO Tracy Fellows said,

India is an important part of our international growth strategy. We believe in the potential of the Indian real estate market. REA invests in companies that are leaders in their markets. The joint entity will have access to REA Group’s expertise and know-how from its operations across the globe.

After the acquisition, Dhruv Agarwala, co-founder and CEO of PropTiger, will serve as CEO of the joint entity. Jason Kothari, CEO of Housing.com will not be a part of this new entity (as also mentioned in yesterday’s report). The company’s statement mentions that “he has decided to move on to pursue other opportunities in the Indian Internet space.” However, he will continue to be an advisor to the joint entity through the end of February 2017.

Existing investors in Housing will be given a stake in PropTiger’s Singapore entity. Horizon Ventures, an existing investor in PropTiger is likely to exit. Henry Ruiz of REA Group, Simon Barnett of News Corp, and Jonathan Bullock of SoftBank Corp will now join Raju Narisetti (chair), Ravi Adusumalli and Prashanth Prakash as investor directors on the board of the joint entity.

Commenting on this acquisition, Dhruv Agarwala, Co-founder & CEO of PropTiger said,

The deal is a continuation of our efforts to bring best in class services to consumers and create a unified technology driven platform that is capable of serving all needs of consumers, developers and brokers with respect to buying selling and renting of homes. Housing has established itself as a formidable online brand and we admire its consumer centric product innovation.

Jason Kothari, CEO of Housing.com, said,

I am proud of the exceptional progress the Housing team and investors have achieved together in the past 18 months. Housing.com’s partnership with PropTiger is the next transformational step to realize our vision of becoming a full-service online-to-offline real estate services company.

The joint entity will draw on strengths of PropTiger, Housing.com, and Makaan.com to offer a unique holistic experience to consumers, real estate developments, brokers and homeowners. It has now become the only player in India offering a complete range of online and offline services in the real estate space. The service includes personalized search, virtual viewing, site visits, legal and financial diligence, negotiations, property registration, home loans, and post-sales service.

As per the company, by 2030, India is expected to be the third largest real-estate market in the world with the sector contributing to over 15 percent of national GDP. The joint entity now hopes to win the digital real-estate market in India with its capabilities and a strong set of institutional investors.

PropTiger is the largest online residential real estate brokerage firm, having completed transactions worth $1.5 billion since its formation in the year 2011. On the other hand, Housing.com is India’s most popular online platform for buying and selling homes, receiving more than four million visits every month.

This acquisition strengthens PropTiger’s full stack Online-to-Offline (O2O) services proposition. In April 2015, the company had acquired online classifieds platform Makaan.com to launch India’s first O2O platform.

Housing.com, founded in 2012, has raised more than $130 million in funding so far, out of which, about $85 million has been invested by Softbank. Other investors in the company include Nexus Venture Partners and Helion Venture Partners, Falcon Edge Capital, Nirvana Venture, Apoletto Holdings, along with Snapdeal co-founders Kunal Bahl and Rohit Bansal.

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