Online advertising behemoth REA Group has continued to widen its international footprint in attractive investment hubs, increasing its stake in a leading Southeast Asian listings portal with a strong presence in Hong Kong.
REA has increased its shareholding in iProperty to 19.4 per cent from 17.2 per cent in a deal worth $15 million. The move was widely expected after REA became a majority shareholder in the ASX-listed iProperty in July.
The operator of Australia’s number one property listings website realestate.com.au will sell its Hong Kong business squarefoot.com.hk to iProperty to gain a greater shareholding in the business.
The two brands will continue to be run separately as part of an enlarged group that can now boast Hong Kong’s number one property website GoHome, and the leading website for expatriates squarefoot.com.hk.
Chief executive of REA Tracey Fellows said the deal combines two complimentary brands occupying the number one and two positions in the market. “Hong Kong was one place where we both had existing businesses but in very different parts of the market,” Ms Fellows said.
“Over time we said might it be a better outcome for both businesses to combine them and clearly have the number one portal in Hong Kong by a long way”
REA chairman Hamish McLennan said the deal “solidifies our long term partnership” with iProperty’s management team.
“This further reinforces in our mind that iProperty will be the pre-eminent portal in Southeast Asia,” he added.
ASX-listed iProperty also has operations in Malaysia, Indonesia, Macau and Singapore, with investments in India and The Philippines.
The move gives REA greater exposure to an early stage growth market, with the majority of Asian property listings placed in print publications.
The rapid migration of advertising dollars from print to online, which has propelled REA’s phenomenal growth in recent years, hasn’t taken hold in Asia yet.
“It’s a market that’s just waiting to get bigger and bigger,” Ms Fellows said. “We see huge potential in the market in the next year, two years and beyond.”
The new shareholding takes REA to just below the 19.9 per cent takeover threshold. REA has previously agreed not to launch a takeover bid at any time on or before October 31.
Asked if REA is considering a takeover bid, Ms Fellows did not rule out the possibility. “Right now we have a bigger stake and also a seat on the board that will come with the stake,” she said. “We will continue to assess this investment as we do other investments over time.”
It comes just one week after News Corp, the majority owner of REA, entered the US real estate market with an audacious takeover of listings business Move in a cash deal that values the company at $US950 million ($1.08bn).
REA plans to hold a 20 per cent stake in Move with 80 per cent held by News, continuing an ongoing corporate agenda of focusing on fast growing markets being reshaped by the twin forces of globalisation and digitalisation.