A special purpose acquisition company (SPAC) backed by Hong Kong billionaire Richard Li Tzar-kai and billionaire technology investor Peter Thiel agreed on Friday to acquire Singapore’s PropertyGuru Group in a deal that values Southeast Asia’s biggest property technology company at about US$1.8 billion.
It is the first transaction by one of Li’s three US-listed blank-cheque companies, which have raised collectively more than US$1 billion under the Bridgetown Holding brand over the past 10 months. Li, the younger son of Hong Kong property tycoon Li Ka-shing, also is in the early stages of setting up a fourth SPAC.
Bridgetown 2, a Li-backed SPAC that raised US$299 million in an initial public offering in January, would acquire PropertyGuru, which counts private equity firms TPG Capital and Kohlberg Kravis and Roberts (KKR) as investors, and take the combined entity public on New York Stock Exchange.
“This process of becoming a public company will provide us with greater financial resources to do what we do best – helping people find, finance and own their homes in an efficient and transparent manner,” said Hari Krishnan, chief executive officer at PropertyGuru in a press release.
Bridgetown 2’s stock traded in recent weeks around its US$10 stock price amid a more muted atmosphere for SPACs, which had been one of the hottest fundraising trends globally since early last year.
The blank-cheque companies collectively raised more than US$105 billion in the first half of the year, but fatigue has set in among institutional investors in recent months given the flood of deals and the US Securities and Exchange Commission (SEC) raising questions in April about how the investment vehicles account for stock warrants common to most SPAC transactions.
Hedge fund billionaire Bill Ackman abandoned plans to buy a 10 per cent stake in Universal Music Group with his SPAC this week after running afoul of the SEC and instead plans to pursue the deal with his investment firm, Pershing Square Holdings. Ackman raised US$4 billion in the IPO of his blank-cheque company last July, the biggest fundraising by a SPAC to date.
SPACs do not have an existing business, instead they are created purely as a vehicle to raise financial war chests and buy assets within a specified time period, usually two years. They have been seen as an easier path for some companies, particularly pre-profit emerging technology firms, to go public and are primarily listed in the US.
Hong Kong billionaire Richard Li Tzar-kai Photo: Getty Images
Still, Asian investors such as Li, and potential target companies in the region, have remained keen on SPACs. Regulators in Hong Kong and in Singapore are considering changes to allow SPACs to list in the region, with Singapore potentially unveiling new rules later this summer.
Grab Holdings, Southeast Asia’s most valuable tech unicorn, agreed to go public via a SPAC in April in a deal that would value it at US$39.6 billion. The company said in June that it would delay closing of the merger until the fourth quarter.
To complete its transaction with PropertyGuru, Bridgetown 2 raised an additional US$100 million in so-called private investment in public entity (PIPE) financing, anchored by Australia’s REA Group, Baillie Gifford and other institutional investors.
The deal is expected to close in the fourth quarter of this year or the first quarter of 2022.
In its prospectus in January, Bridgetown 2 said it would seek targets in “new economy sectors” in Southeast Asia, including technology, financial services and media.
Another Bridgetown vehicle held talks with Indonesian e-commerce unicorn Tokopedia last year, but Tokopedia ultimately decided to merge with crosstown ride-hailing giant Gojek and plans a listing in Jakarta and the US.
PropertyGuru was founded in Singapore in 2007 by serial entrepreneurs Steve Melhuish and Jani Rautiainen and counts 5.5 million monthly visits from property seekers to its Singapore website. It employs more than 1,200 people and has operations in five Southeast Asian markets: Singapore, Vietnam, Malaysia, Indonesia and Thailand.
The company raised about S$300 million (US$220 million) in its latest series of funding rounds last year led by TPG and KKR.
In addition to its online real estate portals, the company offers sales process automation software to property developers, is building what it hopes will eventually be a stand-alone property data provider in and has started a mortgage marketplace where it acts as a broker in Singapore that it hopes to expand to other markets.
In May, PropertyGuru agreed to buy REA’s businesses in Malaysia and Thailand, with REA receiving an 18 per cent stake in PropertyGuru and the right to appoint a director to its board. That followed the company agreeing to buy MyProperty Data in Malaysia in November.
Additional reporting by Jodi Xu Klein