New Delhi:
Realty portal SouFun likely to be roped in for strategic investment or even a buyout; China's largest search provider Baidu also evinces interest
Realty portal Housing.com has begun preliminary negotiations with Chinese real estate portal SouFun for either a strategic investment or buyout, according to two people directly aware of the talks.
Mumbai-based Housing, which is backed by Japan's SoftBank, has also attracted the attention of China's largest search provider Baidu although sources aware of the talks term it as “very early interest.“ “SouFun (executives) will be in India early next week to meet the Housing team,“ said one person quoted above. Such strategic interest from China, can prove to be a shot in the arm for the company, which has been scouting for new investors even as it battled management turmoil through much of 2015.
To ease its funding woes as talks progress, SoftBank -which controls the operations of Housing and owns 32% stake in the company -is expected to provide $30 million as a bridge round, said sources privy to the developments. SoftBank and Housing.com declined to comment for this story. SouFun and Baidu did not reply to ET's email queries.
Since the ouster of cofounder Rahul Yadav in July following weeks of acrimony with the board, Housing -founded in 2012 by a group of IIT-Bombay students -has focused on building new products to boost income, including advertising revenue.
Of the dozen college-mates who teamed up to start the portal, four including Yadav have now left the company. The company had also sought to conclude a deal for a buyout with classifieds portal Quikr, which also failed, said people aware of the developments.
At present, Housing is run by an executive committee that controls the finances and operations of the company. The committee is led by Jonathan Bullock, the SoftBank executive who replaced the investment firm's president Nikesh Arora on board of Housing.
Last month, ET reported that Housing.com plans to close four out of sev n business units in a bid to reduce osts and accelerate focus on its core echnology . The company later conirmed the development and said it as already laid off 160 people.
Experts are of the view that M&A activity in online classifieds is driven by investor expectations. Rising competition between players -realty classifieds has over nine wellfunded players -is increasing the cost of customer acquisition in a market which is still not as large.These companies between themselves have collectively raised `. 2,200 crore in funding.
“Collectively, we figure (what) the market can support; whoever has more resources becomes the point of consolidation,“ said Ashish Gupta, a managing partner at Helion Venture Partners which has backed Housing.com.
He did not specifically comment on Housing.com's developments.
Housing, which competes with CommonFloor, 99Acres, and Magicbricks, owned by the publisher of this paper, has attracted more than `760 crore) in funding $120 million (.and is valued at over `. 1,500 crore.
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