New Zealand website business, Trade Me has accepted a slightly higher offer from European private equity giant, Apax Partners, and subject to there being no higher rival offers, will become foreign-controlled.
TradeMe is New Zealand’s leading online marketplace. It’s like eBay, REA, CAR and SEK all rolled into one. Having upgraded its trading platform, the company is set to return to strong earnings growth from FY17. TradeMe fits a number of our preferred investment characteristics, and we continue to hold it in our funds.
Deutsche Bank observes the competitive environment for the company’s marketplace business has deteriorated significantly and the entry of Amazon into Australia, likely to be followed by New Zealand, will increase pressure.
Having analysed the listings on Trade Me and on rival Realestate.co.nz the broker concludes Trade Me has begun to recover market share after a long period of losses, which began after the head of property left to join the rival in 2013. There is still a lot of ground to catch up but thus a lot of upside potential if successful, the broker notes.