HDFC may sell brokerage, digital biz to Quikr

BENGALURU/MUMBAI: Housing Development Finance Corp. Ltd is in talks with online classifieds company Quikr India Pvt Ltd to sell its brokerage business HDFC Realty and its digital business HDFC Red in an-all stock deal, four people with direct knowledge of the matter said.

The size of the deal is likely to be ₹350-400 crore and HDFC, India’s largest mortgage lender, will get a stake of around 5% stake in Quikr in return, said two of the people.

The term sheet has been signed and the due diligence process is on, said one of the two persons.

In its last funding round, when it received a $150-million cheque from AB Kinnevik, Tiger Global Management and Steadview Capital, Quikr was valued at about $1 billion.

The valuation has since risen to $1.5 billion (₹9,600 crore) following multiple acquisitions over the past 12 months. On the basis of this valuation, a 5% stake would be worth ₹480 crore.

The $1.5 billion seems to be disproportionate to the revenue of Quikr, one of a handful of homegrown unicorns, or startups worth $1 billion or more.

The company clocked net sales of ₹41 crore in the year ended March 31, 2016, against ₹25 crore the year before. Its loss surged to ₹534 crore from ₹450 crore in the same period, according to regulatory filings.

The acquisition of HDFC Red and Realty will be the second big acquisition by Quikr in the online real estate segment, after it acquired Tiger Global Management-backed real estate platform Commonfloor in January last year for $120 million. Quikr also acquired Grabhouse, a home rental startup, for about $10 million in November.

The second person cited above said the acquisitions are aimed at bolstering Quikr’s revenue. For instance, Commonfloor’s revenue was ₹45 crore in FY15, compared with Quikr’s ₹25 crore.

HDFC Realty had revenues of ₹38 crore and a loss of ₹34 lakh for 2015-16, according to the annual report of HDFC. HDFC Red’s owner, HDFC Developers Ltd, had revenues of ₹6 crore and a loss of ₹12.4 crore in the same period.

Business Standard first reported that Quikr was in talks with HDFC on Wednesday without giving details of the deal.

A Quikr spokesperson declined to comment on the deal. An HDFC spokesperson did not respond to an email seeking comment.