UK property listings site Zoopla is splashing out £120 million in cash (~$150M) on a big purchase of its own — announcing its intention to acquire real estate analytics firm Hometrack as it looks to expand its data and analytics services.
In a press release today, Zoopla said Hometrack will help it strengthen its property services for consumers and expand its b2b play. It’s slating several new consumer and b2b products coming this year.
“The deal will allow us to serve our consumers and partners even more effectively and gives us unrivalled data capabilities in the residential property market. Hometrack is a perfect fit to develop our data services business,” said Alex Chesterman, founder and CEO of Zoopla, in a statement.
Currently Zoopla’s website offers details of average house prices for different UK regions based on its own estimates — so is presumably looking to enhance those estimates with Hometrack’s house price index data.
Hometrack, which was founded in the UK back in 1999, sells house price valuation services to mortgage lenders in Europe and Australia. According to the company’s website its automated valuation model (AVM) is used by 16 of the top 20 UK mortgage lenders, with the tech being used to generate more than 20M property valuations per year. It also makes the AVM available as an API.
It has more than 400 customers for its various property market analytics services — which, besides mortgage lenders, includes new home developers, investors, housing associations and local authorities.
Zoopla said it intends to continue operating the Hometrack brand and platform as a standalone after the close of the acquisition — expected Friday — with the latter’s 55-strong team intended to form what it describes as the “cornerstone” of its data services business, led by Hometrack CEO Charlie Bryant.
On the financial side, Hometrack reported revenue CAGR of around 15 per cent from full year 2013 to FY16, and generated revenues of £15.5M and adjusted EBITDA of £7.1M in the year to 30 June, 2016. And Zoopla notes that more than 70 per cent of Hometrack’s revenues are subscription-based and — in its words — “underpinned by long-term relationships”. So it’s spying a reliable revenue pipe here.
Indeed, it says it expects the acquisition to be “earnings and margin enhancing on an adjusted basis in first full year”.
In terms of the structure of the transaction, £108M will be due on completion, with a further £6M payable on each of the first and second anniversaries of the deal.
Zoopla says the acquisition will be financed through a combination of existing cash resources, a new £75M term loan and an equity placing of up to 5 per cent of its ordinary issued share capital.
The company already owns price comparison site uSwitch, and picked up another data supplier site, UpMyStreet, back in 2012. It has also spent money buying up various other local property site rivals, such as Prime Location.
Today Zoopla also noted it is in negotiations on another smaller, complementary acquisition — although it told investors discussions on that front remain “ongoing”.