In the Indian e-start-up business space, Quikr has become everyone’s envy. The pace at which it is acquiring companies to grow and diversify is remarkable. Since January last year, it has acquired around 8 companies, and the latest, it is buying two arms of HDFC’s brokerage business – HDFC Realty and the digital business HDFC Red in an all-stock deal.
It is estimated that the deal would be pegged around Rs 400 crore. In return, HDFC Ltd, the housing finance arm of HDFC Bank, will pick up 5% stake in Quikr, a leading online cross-category classifieds platform. The valuation of Quikr, one of a handful of homegrown unicorns (start-ups worth $1 billion), is pegged at around $1.5 billion, or around Rs 10,000 crore.
The acquisition of these two arms of HDFC Ltd will help Quikr to scale up its business as it strives to get into potential business areas like real estate, automobiles, jobs and other customer-related services. The acquisition will also help Quikr to generate leads in the real estate business and turn them into actual business deals. For HDFC, the deal will help it to sell loans as it can leverage on Quikr’s platform. The online real estate business has seen major consolidation and in the last few years.
The Quikr-HDFC deal
While the final contours of the deal is being worked, if the deal goes through Quikr will then have the distinction of acquiring five firms in the real estate space alone in the last two years. The acquisition of the brokerage business of HDFC will give Quikr access to more premium realty buyers, who need servicing for their real estate needs. The HDFC deal will help Quikr to push up revenue and take a leap in the business and penetrate deeper into new properties.
As per regulatory filings, Quikr had clocked net sales of Rs41 crore in the year ended March 31, 2016 against Rs 25 crore the year before. The company’s loss moved upto Rs 534 crore from Rs 450 crore in the same period.
About HDFC Red and HDFC Realty
Similarly, HDFC Realty had revenue of Rs 38 crore and a loss of Rs 34 lakh for fiscal 2015-16, according to the annual report of HDFC.HDFC Red, a digital real estate search platform, was founded in 2010 and is a wholly owned subsidiary of HDFC Ltd. HDFC Red’s owner, HDFC Developers Ltd, had revenue of Rs 6 crore and a loss of Rs 12.4 crore in the same period. It has invested Rs 30 crore in the subsidiary. HDFC Red has around 4500 developers and 9000 projects listed. It lists properties from 21 Indian cities. In March 2016, the company changed its model from an advertising-led one to a lead-based one and has started services business for builders.
HDFC Red offers a complete map and infrastructure around the vicinity for the home owner. It also helps people to check distance between home and office, school, hospitals etc. It has an app that customizes the user’s preference for a house. HDFC Ltd, the mortgage lender had a loan book of Rs 2.86 trillion as on December 2016. In 2015-16, it reported an annual profit of Rs 7,093 crore.
Past deals of Quikr
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