REA Group is set to increase its ownership interest in Indian real-estate platform Elara Technologies – which operates established brands such as Housing.com, PropTiger.com and Makaan.com – from 13.5 per cent to between 47.2 per cent and 61.1 per cent.
REA has agreed to subscribe for US$34.5 million of preference shares in Elara to fund the repayment of 50 per cent of Elara’s debt facility, with the group’s media partner News Corp to subscribe for US$34.5 million of preference shares in Elara, funding the repayment of the remaining 50 per cent of Elara’s debt facility.
The global real estate firm has also agreed to acquire the Elara shares held by the three largest shareholders after News Corp and REA, representing a combined shareholding of 11.7 per cent, through the issuance of 199,503 new REA shares with an estimated market value of $23.9 million.
Upon completion of the deal, worth a total of between US$50 million to US$70 million, REA will hold five out of nine board seats.
REA Group will then move to acquire the remaining shareholdings, representing 13.9 per cent.
If approved, REA will issue a maximum of 249,348 additional shares with an estimated market value of $29.9 million, taking its shareholdings to up to 61.1 per cent.
REA expects to complete the transaction in the second quarter of the 2021 financial year, but the deal remains subject to confirmatory due diligence and the renegotiation of key management employment contracts.
“India is an incredibly attractive market and one that provides excellent long-term growth opportunities, while complementing REA’s footprint in Asia and North America,” REA Group CEO Owen Wilson said.
“The country is forecast to deliver strong growth over the next decade and continues to experience rapid digital transformation.
“With over 700 million internet users and roughly half a billion yet to come online, our increased investment in Elara will allow REA to be at the forefront of the considerable long-term opportunities within India, and the digitisation of the real estate sector.”
Mr Wilson concluded: “This transaction creates a unique opportunity to leverage the combined talent and expertise of REA and Elara to become the number one digital real estate business in India.”