Grove hits it out of the park with REA-iProperty merger
By Karamjit Singh November 3, 2015
- Game-changing US$414mil deal for Rupert Murdoch’s REA
- Deal affirms Malaysia ‘great place to build Asean startups’
AUSTRALIAN-based REA Group, which is 60%-owned by Rupert Murdoch’s News Corp, is making a bid to completely take over Malaysian-founded property portal company iProperty Group, which is listed on the Australian Securities Exchange (ASX).
Describing the proposed deal as a “global game-changer” from a property sector point of view, on a personal level, Catcha Group Sdn Bhd founder and chairman Patrick Grove (pic above) is also keen to stress his hopes that his latest deal “inspires other entrepreneurs to start great disruptive companies.”
“And I hope it motivates investors to back them, knowing that Asean can and will create more great companies,” he told Digital News Asia (DNA) while waiting to catch a flight back to Kuala Lumpur from Mexico City.
Having just spent a week in the United States meeting with Rupert Murdoch and his son Lachlan, “after marathon sessions with bankers and lawyers,” according to Grove, everything was worked out, leading to the announcement on Nov 2.
That announcement will see ASX-listed REA Group making an offer of close to A$578 million (US$414 million) for the remainder of iProperty Group.
Having first taken 17.2% of in iProperty in July 2014, REA boosted its stake to 22.7% before announcing its intention to take over the remainder in a deal that values the South-East Asian-focused online property group at A$751 million (US$536 million).
Grove’s Kuala Lumpur-based Catcha Group owns a 16.7% stake in iProperty.
The offer price of A$4 per share is at a premium to the Oct 30 closing of A$3.51. There is no lock-in period for shareholders who accept this cash offer.
However, the iProperty filing with ASX states that Catcha Group plans to accept a ‘Mixed Alternative’ proposal of cash and a stake in an Australian unlisted company that will hold an indirect, minority equity interest in iProperty, once the deal goes through.
Game-changer on a global scale
While Australian media reports have been highlighting the Asian-focused intentions of REA Group, Grove describes the deal as a game-changer on a global scale.
“While we are pretty sure we are leading in the region, this is totally about scale to build a global player.
“REA/ News Corp also own Move.com, one of the largest property portal groups in the United States.
“So now, once the deal is completed, one group is able to give property buyers and sellers access to Asean (the Association of South-East Asian Nations), Australia, China (including Hong Kong), and the United States.
“This is game-changing!” he declared.
The deal is also hugely impactful on three other levels.
Firstly, it just reaffirms the value of the South-East Asian region from a digital point of view – more so now with smartphone penetration increasing rapidly year-on-year.
Recent data by Google Inc’s Consumer Barometer, which tracks digital behaviour across the world including six South-East Asian countries – Indonesia, Malaysia, Singapore, Thailand, Vietnam and Philippines – shows smartphone penetration in these countries ranging from 43% (Indonesia) to 88% (Singapore).
Having grown up in the region and based in Malaysia since the late 1990s, Grove, whose businesses depend on consumers being online, has long been convinced of the immense potential of digital-based businesses in the region.
He has now convinced Rupert Murdoch and REA Group as well.
“They love property portals, and we’ve finally convinced them that Malaysia is a great place to build a massive online Asean business, and that Asean has huge growth potential ahead,” Grove told DNA.
Started iProperty with US$210K
Grove is also a big believer in Malaysia being the perfect place to launch South-East Asian-focused startups, and likes nothing better than to use his own businesses as proof.
“We started iProperty with RM900,000 in 2007, so it shows great things can happen from Malaysia for the region,” he said. [RM1 = US$0.24 at current rates]
Interestingly, Grove actually bought an existing property portal launched by a husband-and-wife team and renamed it iProperty before going on and doing all the things he has with it.
He also confirmed that iProperty chief executive officer Georg Chmiel (pic) will remain in control of the business.
“There are no changes. REA likes what we have done and what we are going to do,” said Grove, while adding that his own role has not been determined yet.
With this deal only reinforcing his reputation as one of the key players in Asean’s emerging digital economy, one will expect Grove to have his eye on more disruptive plays in the region.
Just don’t expect him to play as active a role.
“We (Catcha Group) are always looking for opportunities. I have said this before, that we are living in the greatest time in history to start a company!
“That said, health has been an issue for me this year and that is my core priority going forward,” said Grove.
Will he now buy that dream yacht of his? “Hopefully Mr Murdoch will lend me his,” he quipped.