SINGAPORE (Oct 28): On Oct 23, Reuters reported that local online portal PropertyGuru was cancelling its IPO on the Australian Securities Exchange. On Oct 7, dealstreetasia reported that PropertyGuru had lodged a prospectus and was looking to raise at least A$345 million ($322 million) by selling at least 84.5 million shares, of which 40.6 million would have been new shares, and the rest vendor shares. According to PropertyGuru’s prospectus, the IPO price would have been announced on Oct 24.
The prospectus states that the IPO proceeds would: i) provide funding and financial flexibility to pursue the company’s growth strategy; ii) provide existing shareholders with the opportunity to realise all or part of their investment in the company through the sale; iii) fund other payments, including repurchase of shares issued on the conversion of the warrants and deferred consideration for the acquisition of shares in Dai Viet in 2018; and iv) pay the costs of the IPO, likely to have been A$22.4 million (see Table 1).
However, if PropertyGuru withdraws the prospectus or the offer or indicates that it does not intend to proceed with the offer, it can do so without cost or liability to the company.
At any rate, dealstreetasia says in a report on Oct 23 that PropertyGuru does not require new funds to be raised to support its current business operations.
Nonetheless, a fresh infusion of funds looks like it would have come in handy because of accumulated losses.
Here are some numbers: In CY2017, PropertyGuru reported revenue of $44.8 million, operating expenses of $51.5 million, and earnings before interest, taxes, depreciation and amortisation of minus $7.9 million (see Table 2). In CY2018, PropertyGuru reported revenue of $59.5 million and operating expenses of $58.2 million, leading to Ebitda of $4.5 million. Ebitda swung back into a loss of $33.5 million in 1HCY2019, with the company’s prospectus forecasting an Ebitda loss of $81.6 million for CY2019.
Working capital, which is the company’s current assets less current liabilities, is at a negative $157 million, with cash on hand of $22.7 million as at June 30. Shareholders equity is a negative $48.5 million. If the company’s IPO had been successful, it would have received a cash infusion of A$134.4 million, and working capital and shareholders’ equity would have turned positive.
The company would still be expecting to make losses this year and next, though. The prospectus shows that pro forma accumulated losses would have risen to $187.6 million in 1HCY2019 compared with actual accumulated losses of $135.9 million in 1HCY2019 (the company has been making losses for a couple of years, according to the prospectus).
Operationally, PropertyGuru’s presence is mainly in Singapore and, since last year, Vietnam. It is also in a couple of other Southeast Asian countries, but these do not figure much in its revenue stream, contributing $5.9 million out of $39 million in 1HCY2019. Its main revenue source is property agent subscription and advertisements from developers, although the latter remains modest.
While PropertyGuru’s market share by geography appears large, this is measured not by revenue but by “relative engagement market share”, which is calculated as time spent on the PropertyGuru website multiplied by the number of visits relative to the time spent on comparable websites multiplied by the number of visits. The average time on-site is calculated as the time elapsed between the first and last page view per visit (visits are closed after 30 minutes of inactivity).
Looking ahead, PropertyGuru should be able to fund its operations with either new investors or a combination of new investors, current investors, venture capital, venture debt, private equity, bank debt and bonds.
