PropTiger Checks into Housing

News Corp-backed real estate website PropTiger has merged with Housing.com in an all-stock deal, bringing to an end the contentious saga of the Mumbai startup and creating one of the country's largest digital platforms for property listings. As part of the deal, the combined entity will raise $50 million from News Corp-owned online real estate advertising company REA Group and another $5 million from Japan's SoftBank, the primary investor in Housing.com.

The fundraising will be executed at a valuation of about $250 million for the merged company. Housing has been valued at about $70 million, unchanged from two months ago when it raised $5 million in bridge funding from SoftBank.

This is the largest deal in the online real estate listings market in about a year, coming after digital classifieds firm Quikr's acquisition of Tiger Global-backed CommonFloor for $100-120 million in January 2016.

Experts, however, believe the deal is a case of too little, too late, even after factoring in the Housing's discounted valuation. Housing CEO Jason Kothari, who was brought in by the SoftBank board after founder-CEO Rahul Yadav was ousted, will exit the new company after serving as adviser for two months. Chief Business Officer Mani Rangarajan is currently running operations at Housing.

Negotiations for the merger, which was in the works the past four to six months, were mired in complicated contractual rights held by SoftBank as well as in PropTiger's quest to strike the deal at the right valuation.

For Housing, which began as a storied startup founded by about a dozen IIT-Bombay graduates in 2012, the deal has been struck at a significant discount to its peak valuation of about Rs.1,500 crore (about $220 million) in late 2014.

Three months ago, seven individual investors in Housing.com, including Zishaan Hayath, who had owned less than 1% equity in the company , had sold their holdings at a $40 million valuation. The offer was not made to Housing's cofounders, who own about 6% of the company , or larger individual stakeholders such as Haresh Chawla.

PropTiger is set to scale back some of its operations, including that of Makaan.com which is a direct competitor to Housing. PropTiger had bought Makaan in April 2015.

Industry experts say keeping all three brands alive would add little or no value in terms of revenue.

Housing has raised more than $135 million in funding so far, including about $90 million by SoftBank. Other major investors include Nexus Venture Partners and Helion Venture Partners. The company also counts Falcon Edge Capital, Nirvana Venture, Russian billionaire Yuri Milner's Apoletto Holdings and Snapdeal co-founders Kunal Bahl and Rohit Bansal as shareholders.

After the ouster of Housing founder Rahul Yadav for bad behaviour and frequent clashes with the board, most of the other cofounders quit.

Under Kothari, the company revamped its top management and appointed more experienced people on its board, including former Google and Amazon executive Vivek Jain as chief product and technology officer and Keerthi Kiran as the head of new real estate projects.

PropTiger's other investors include SAIF Partners and Accel Partners. News Corp acquired a 25% stake in PropTiger's Singapore-based parent, Elara Technologies Pte, in November 2014 for $30 million and increased its stake to about 30% in June 2015.

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