Hari Krishnan, chief government officer of Singapore-based start-up PropertyGuru.

Nicky Loh | Bloomberg | Getty Pictures

Southeast Asia’s on-line actual property firm PropertyGuru plans to make use of proceeds from its public market debut subsequent 12 months for mergers and acquisitions, its CEO Hari V. Krishnan informed CNBC.

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

SPACs — or particular function acquisition firms — increase capital from public markets and use that money to merge with a personal firm, with the objective of taking the corporate public inside a two-year interval.

The mixed firm from the merger between Bridgetown 2 and PropertyGuru is about to have a market worth of round $1.78 billion, according to the company. The deal contains $100 million of personal placement from funding administration companies just like the UK’s Baillie Gifford and Naya Capital, Australia’s REA Group, New York-based Akaris International Companions in addition to certainly one of Malaysia’s largest asset managers.

“That cash that will probably be on the steadiness sheet on the finish of this enterprise mixture settlement will probably be very a lot in direction of M&A,” Krishnan informed CNBC in an interview final week. “And I’d say largely targeted on knowledge, software program, residence providers and fintech.”

In August, PropertyGuru acquired REA Group’s Malaysia and Thailand property portal companies.

Krishnan dominated out any speedy plans to develop into different markets.

The cope with Bridgetown 2 is ready for regulatory approvals from the U.S. Securities and Alternate Fee. Krishnan predicted PropertyGuru may commerce on the New York Inventory Alternate close to the tail finish of the January-March quarter as soon as the deal is accomplished.

Bridgetown 2 Holdings shares are down greater than 23% since its market debut in January.

Why via a SPAC?

PropertyGuru thought of all choices and all inventory exchanges earlier than inking the cope with Bridgetown 2, which included attempting for a standard IPO once more, Krishnan stated.

In 2019, the Singapore head-quartered firm scrapped plans for an initial public offering on the Australian securities alternate as a result of “market circumstances weren’t superb.” With Bridgetown 2, it was extra about discovering the suitable associate, based on Krishnan.

We really feel we’re a compelling funding and clearly, time will inform whether or not buyers agree.

Hari Krishnan

CEO, PropertyGuru

“We weren’t positive that we might go to the U.S., we weren’t locked in on SPAC because the mannequin, it grew to become way more about the place will we maximize the chance, the place will we maximize the potential to share our story with worthy buyers?” he stated.

SPACs have steadily been attracting interest in Asia.

Whereas personal firms see them as a non-traditional approach to entry the capital market, a rising variety of Asia-based sponsors are additionally backing these blank-check entities.

Grab, certainly one of Southeast Asia’s most outstanding start-ups, started trading as a publicly listed company on the Nasdaq on Dec. 2, after it merged with the blank-check firm, Altimeter Development Corp. Shares tumbled on the primary day of post-merger buying and selling and are down 45% since then.

Overcoming investor scrutiny

PropertyGuru’s “tried-and-tested” enterprise mannequin, its 14-year historical past, and the corporate’s financial fundamentals will be capable of stand as much as investor scrutiny as soon as it trades within the public market, based on Krishnan.

“I believe that separates us from a number of different firms which have gone public both via the SPAC route or who’re from our a part of the world,” he stated, including that the enterprise has a relatively conservative market valuation than its listed friends.

“We really feel we’re a compelling funding and clearly, time will inform whether or not buyers agree,” Krishnan stated.

PropertyGuru’s current backers embrace world funding companies TPG Capital and KKR.

In a regulatory filing, the corporate reported a internet lack of 14.4 million Singapore {dollars} (about $10.56 million) final 12 months and a internet lack of 38.5 million Singapore {dollars} in 2019.

For the six months ending in June, PropertyGuru reported a internet lack of 150.6 million Singapore {dollars} and attributed most of it to honest worth loss on choice share conversion choices. The corporate stated that as these choice shares have been transformed to extraordinary shares, such honest worth losses “usually are not anticipated in future intervals.”

Skyline of condominiums within the Grange Street space of Singapore on Might 8, 2021.

Wei Leng Tay | Bloomberg | Getty Pictures

It additionally reported a near 18% jump in revenue to 42.9 million Singapore {dollars} for a similar interval.

The coronavirus pandemic is a significant headwind for the corporate and 2020 was a difficult 12 months, Krishnan stated. That was despite sky-high property prices in Singapore, certainly one of PropertyGuru’s main markets.

However the firm is betting on a number of key, long-term macroeconomic developments in Southeast Asia — comparable to urbanization, digitization, and the emergence of the center class. “These are developments that aren’t going to alter. They are often paused, however they can’t be stopped,” Krishnan stated.

PropertyGuru has been increasing past property marketplaces, and into fintech and knowledge software program providers, with an general complete addressable market at roughly $8 billion, he added.