Frontier Digital Ventures (ASX:FDV) has raised A$13 million to partially fund the final payments for the acquisitions of its FDV Latam businesses, InfoCasas and Encuentra24.
Uruguay-based InfoCasas is the market leader in its native country and claims leadership positions in Paraguay and Bolivia while also operating as a challenger in Peru and Colombia.
FDV initially invested A$1.2 million for a 31% stake in InfoCasas in 2017 and took its shareholding from 51% to 100% in 2021. Since then the company's CEO Ricardo Frechou has been promoted to lead FDV's regional Latam division with InfoCasas' CTO Guillermo Tavidian also carrying out the same role for FDV Latam.
According to company filings, InfoCasas has achieved a revenue compound annual growth rate (CAGR) of 67.8% from FY17 to FY22, and has exceeded expectations since being wholly acquired. It represented over 20% of FDV's overall revenues in FY22.
As for Encuentra24, the Paraguay-based business cemented its place as the leading general classifieds when it merged with OLX's assets in the region in 2020. FDV already owned a 26% stake in the business when it decided to acquire the remaining shares of Encuentra24 in 2021 and sew up full ownership of all of its operating businesses in the region.
The company says that Encuentra24’s EBITDA profile has improved ~7x between FY21 and FY22, representing an expansion in EBITDA margin from +1% to +8% (100% basis).
Both 2021 transactions had contingent consideration payments, which FDV will now pay off with the money raised through an institutional placement which will be followed by a share purchase plan (SPP) aiming to raise an additional A$2 million from retail investors. The remaining balance for the acquisitions will be funded from existing cash reserves.
FDV hopes to realize around A$3 million worth of savings in FY23 as a result of breaking out its Latin American business in 2022 and sharing operational knowledge and intellectual property between operating companies.
FDV Latam's portfolio (left) also includes the Chilean general classifieds site Yapo, as well as the Colombian real estate vertical Fincaraíz and is one of the largest real estate marketplace operators in the region. The company is targeting US$100 million in revenue in the medium term as well as a listing on the Nasdaq.