Jan 11, 2017 11:34 AM IST | Source:

EXCLUSIVE: PropTiger, Housing and Makaan to be merged into single entity

The merger will provide customers with complete hand holding - right from search and discovery on the Housing platform to transaction fulfillment which includes site visit, registration, help with documentation, and home finance.

Priyanka Sahay & Harsimran Julka

Moneycontrol Bureau

Real estate portals PropTiger, Housing and Makaan will soon move into a single legal entity but will hold their respective brand names, Dhruv Agarwala, co-founder and CEO of PropTiger told Moneycontrol in an exclusive interview after announcing merger with Mumbai-based competitor in an all-stock deal on Tuesday.

The name of the legal entity is yet to be decided. The all-stock merger of Housing into PropTiger indicates that more such consolidation is expected in 2017 even as the struggling real estate is seeing a slump due to demonetisation. The decline in purchase of properties has frozen ad and marketing budgets which these real estate portals used to thrive upon. In April 2015, PropTiger had acquired for an undisclosed amount.

“We will continue to use all the three brands. PropTiger will be used for transaction services, Makaan for marketplace brand to provide agent services and Housing as the demand and supply aggregator.  The three will come under a single legal entity,” he said over a call. The merger makes PropTiger one of the largest companies in this space with rivals such as MagicBricks, 99acres, Sulekha, IndiaProperty, Grabhouse and CommonFloor which was acquired by Quikr, last year.

The three brands -- Makaan, PropTiger and Housing will continue to have their separate apps and websites for now. “Housing has built a strong brand on online aggregation of demand and we will not like it to go away,” he added.

(Funding and investment details of | Source: Tracxn)

As part of the transaction, Australia-based REA Group Limited will invest USD 50 million in the joint entity with an affiliate of SoftBank Group Corp, investing USD 5 million. REA Group is a digital advertising business specialising in property. NewsCorp, which the largest shareholder in PropTiger also owns 61.6 percent of REA Group.

Post the deal, NewsCorp continues to be the largest stakeholder in the new entity.

Current CEO of Housing Jason Kothari will move onto another opportunity in the Indian internet space. Kothari declined to give details.

How merger talks began

Agarwala and Jason Kothari, chief executive of Housing have known each other for almost a year. The discussions between the two companies were happening on and off for a partnership. Last year the two companies signed a lead sharing deal.

“That was the start of a more definitive conversation in terms of whether we could come together as two companies or not,” said Agarwala.

“Over the past year Housing has focused its vision from a full stack online real estate company to further strengthen online capability and become leading buying and selling platform. To complete the full stack in the offline piece we were in the process of considering whether we build that ourselves or partner with a player. PropTiger was a very strong company in the transaction space and it had a high amount of market share and shared the same vision of being full stack. So it became a very logical marriage,” said Kothari.

(Funding and invetment details of PropTiger | Source: Tracxn)

The Impact of merger on employees

Massive employee layoffs are not expected for now as companies will retain their individual identity.

“Housing brings in about 800 employees. The joint entity will have almost 2200 employees with minimal impact,” said Agarwala ruling out job losses.

“Housing has very strong tech and product capabilities, while PropTiger claims to be bringing a strong on the ground sales network and execution capabilities,” Agarwala added.

The merger will provide customers with complete hand holding - right from search and discovery on the Housing platform to transaction fulfilment which includes site visit, registration, help with documentation, and home finance.

Demonetisation impact on Real Estate Startups

For the last 2-3 years, real estate market was seeing a slump. Demonetisation has aggravated that decline.

However, Agarwala believes it will help the online sector.

“If you look at demonetisation, it bring a lot of transparency and cleanliness along with RERA. The sector was seen in a very negative light, with demonetisation things have changed,” he added.

With home loan interest rates lowered, startups expect a bounce back in 2017. “The interest rates having been cut, you will see the market come back,” he said.

Housing’s checkered past

Housing was started by 12 IIT students in 2012. Of them two -- Snehil Buxy and Neeraj Bhunwal remain with the company. The troubled firm was majorly in news for a unceremonious exit of the co-founder Rahul Yadav after his differences with the investors.

“Snehil is leading product and Neeraj is leading tech infrastructure and they have contributed immensely over the last few years and will continue to, going forward,” said Kothari.

The merger is also expected to impact brand Housing at some point in coming years. Founders of Housing had pumped in millions of dollars in building the brand through massive ad budgets in 2013-14...

Australian play in India’s real estate sector

The prime investor REA Group operates Australia’s property websites, and, European sites, and, Chinese property site and multiple property portals in Asia through its ownership of iProperty Group.

REA Group also has a significant shareholding in US based Move, Inc. “What they bring to the table is very deep understanding of the global space, strong product and tech capabilities and clearly experience from multiple markets,” said Agarwala.

The Indian real estate today is USD 120 billion and it is projected to grow at a 14 percent compounded annual growth to USD 850 billion by 2020.

The joint entity will be present across 20 cities and will deepen its presence in these cities.

“In terms of market size India is pretty large and is currently very fragmented. There is a lot of opportunity here before thinking of any other market,” said Kothari.

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