News Corp’s 61% owned property listing business REA Group is continuing to withdraw from involvement in Asian markets that once were seen as key to its future growth outside Australia.
The company confirmed to the ASX on Monday that its previously revealed plans to rationalise its Asian plays were continuing with a proposal to transfer ownership of its Malaysian and Thai businesses to Asian-focused firm PropertyGuru in exchange for an 18% in that company and a seat on its board.
REA told the ASX that it was handing over its Malaysia and Thailand entities in exchange for a stake in “a larger, more diversified company in a region that continues to experience rapid digital transformation”.
PropertyGuru will take over iProperty.com.my and Brickz.my in Malaysia and thinkofliving.com and Prakard.com in Thailand from REA. PropertyGuru’s two backers are US private equity giants, TPG and KKR.
In other words, REA is moving from direct ownership of discrete websites to an indirect involvement via a shareholding that can be more readily sold if necessary (making it more liquid).
PropertyGuru is a leading digital property tech company operating marketplaces in Singapore, Vietnam, Malaysia, Thailand and Indonesia.
News and REA have been looking to reduce the Asian involvement since early 2019 when REA revealed an impairment of more than $173 million in the value of its Asian investments.
On Monday REA said the combined businesses will have access to a deeper pool of expertise, technology and investment (meaning less demands on REA for new capital and help).
“Building on the success of our operations in Malaysia and Thailand, this transaction presents a unique opportunity to create the most compelling digital property classifieds company in Southeast Asia and accelerate the next wave of proptech innovation across the region,” REA CEO Owen Wilson said.
Completion of the transaction, which is expected to occur in July, does not require REA shareholder approval and is conditional on REA’s divestment of its 27% interest in 99 Group, operator of other property websites in the region and a rival to PropertyGuru.
REA will retain ownership of its Hong Kong and Myfun businesses and said discussions are well progressed in relation to the divestment.
REA said the PropertyGuru transaction is expected to result in an overall gain on divestment of approximately $10 million.
REA said Malaysia and Thailand businesses are expected to contribute approximately $15 million to group revenue and to reduce earnings by approximately $11 million for the year to June.
The sales leaves REA’s biggest offshore investment as a 20% stake in Move, a US property listings site that is 80% owned by News Corp.
REA shares eased half a per cent to $163.66. They touched an all-time high last Thursday of $166.42.