REA Group to acquire controlling stake in Elara Technologies

Australia-based REA Group on Thursday said it has signed an agreement to acquire controlling stake in Elara Technologies, which runs proptiger.com, housing.com and makaan.com, for up to $70 million (around Rs 520 crore), making it the first acquisition by a foreign company in India’s rapidly expanding digital real estate classifieds advertising market.

REA Group is a digital advertising firm operating Australia’s leading property websites and real estate portals in Europe, Asia and the US. It is listed on Australian Securities Exchange (ASX). REA Group along with News Corp, already owns a significant minority stake in Elara.

As part of the binding agreement, REA Group will raise its ownership in Elara Technologies from the current 13.5% to a controlling interest. On completion REA will hold 5 out of 9 board seats and is expected to have a shareholding of between 47.2 % and 61 .1%.

Total consideration is expected to be in range of $50-70 million, with $34.5 million payable out of existing cash reserves and balance in newly issued REA shares. The transaction, which remains subject to due diligence and the renegotiation of key management employment contracts, is anticipated to be completed in Q2 FY21, REA said.

Elara will continue to operate as a standalone entity within the REA Group structure. Dhruv Agarwala, co-founder and CEO, along with the current leadership team, will continue to lead the company.

On the rational behind the acquisition, REA Group CEO, Owen Wilson said, “India is an incredibly attractive market and one that provides excellent long-term growth opportunities, while complementing REA’s footprint in Australia, Asia and North America. The country is forecast to deliver strong growth over the next decade as it continues to experience rapid digital transformation.

“We plan to make significant investments in Elara going forward. 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,” he added.

Elara Technologies co-founder, Dhruv Agarwala said, “With access to capital and expertise from REA we will continue to launch new products in the market to enhance the consumer experience and make the process of home buying, selling and renting simpler, more digital and more transparent.”

Till date, Elara Technologies has raised an equity capital of $105 million (around Rs 780 crore) from News Corp, REA Group, Elevation Capital, Softbank and Accel, among others.

Indian real estate market has a current market size estimated at $180 billion (around Rs 13 lakh crore) and projected to grow at a CAGR of 19% over the next decade. The digital real estate classifieds advertising market is expected to grow at a CAGR of 29% until 2025, which provides the opportunity to build a big and profitable business.