When Apax Partners sold its 80% share in Spanish market-leading property portal idealista earlier this week for €1.3 billion the obvious question on the lips of many in the industry was “why?”. The company bought its shares in idealista for €235 million in 2015 and since then has seen its investee company consolidate market leadership in Spain and Portugal and challenge for the leadership position in Italy as well.
Why sell a controlling stake in such a business at a time when interest in property in those markets has never been higher?
The noises around the deal were that Apax sold to EQT after becoming frustrated with the lack of progress towards an IPO. Covid-19 had kicked plans for a public floatation into touch for the foreseeable future and despite Airbnb going ahead with its plans across the Atlantic, the time was seen as right for London based Apax to get out of its investment with a huge ROI and leave idealista in a great place.
Looking at how other market-leading property portals from around the world are faring on the open market we begin to see why idealista may have missed the boat by not going public at the start of the year.
The American giant’s stock price saw some fluctuations in 2019 as the market was unsure what to make of its iBuyer play. Apart from dropping to a low in March of $26, the stock has done nothing but grow and saw record highs of $86.95 as recently as the 28th of August.
Ever since the back end of 2019 when it sold off its auto-portal AutoScout24, Scout24’s stock price has seen a meteoric rise. Its price has followed a very similar trend to that of Zillow’s with 2020 starting off fantastically before dropping off a cliff in March (low of €48.7) and since climbing rapidly to a high of €77.75 on the 28th of August.
The undisputed market leader in the UK also saw a bullish start to 2020 as its price climbed to a record high of 691GBX in early February before dropping to 420GBX on the 20th of March. Its climb since then has not been as meteoric as Scout’s or Zillow’s, but at the time of writing, it has recovered almost all of its value and sits on 621GBX per share despite possible threats to its business in the shape of a new competitor and a customer revolt as well as heavy revenue losses incurred during lockdown.
In Australia, the market-leading portal group also counts significant operations in Asia in the form of its share in iProperty and 99.co on top of a dominant domestic portal. Once again we see a familiar pattern with 2020 starting out on a high before a nadir of $72 on the 27th of March. REA Group’s stock saw its all-time high price as recently as the 21st of August when it hit $117 on the back of some solid financials.
The American commercial real estate giant which owns and operates top portal Loopnet is yet another market leader whose stock is sitting mighty pretty and has seen record highs in the last few weeks. The stock started the year off bullishly and reached highs of $731 in January. Covid-19 did not have nearly the same negative impact on CoStar as it did on others and the March 20th low of $550 per share was soon forgotten about as the price rose quickly to record highs of $852 on the 28th of August.
Like idealista, all of these companies are undisputed market leaders in developed markets and have developed brands that end-users know and trust instinctively. Much like these stocks, Apax will have seen their investment’s value rise in 2020 before dropping in March before regaining value very rapidly since then. What Apax may have recognised though in selling an asset this week is that what we may be seeing is an unsustainable zenith of value.
Property is a notoriously cyclical market and while many in Spain, Italy, and Portugal are struggling to make ends meet with jobs scarce and government aid about to run dry, house prices continue to rise and there is already talk in Spain of a property bubble ready to burst. Time will tell if Apax Partners got out at the right time.