HDFC may sell brokerage, digital biz to Quikr

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, three 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 around 5% stake in Quikr in return, said one of the people. The term sheet has been signed and the due diligence of the deal is on, said this person.

In it’s last funding round, 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. Quikr posted net sales of ₹41.24 crore in fiscal 2016, according to documents filed with the Registrar of Companies.

HDFC Realty had revenue of ₹38 crore and a loss of ₹34 lakh for fiscal 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.

For Quikr, this will be the seventh acquisition in the past two years as it tries to grow beyond a listing platform to a one-stop shop for used goods by enabling payments and facilitating logistics.

In November 2016, it acquired home rental startup Grabhouse. In the past year, it bought three companies: online recruitment platform Hiree (Abhiman Technologies Pvt Ltd), on-demand beauty service provider Salosa (owned by Beawel Tech Pvt Ltd) and real estate portal CommonFloor. With the acquisition of HDFC’s broking businesses, Quikr benefits by being able to follow up on real estate leads it generates on its web site.

A Quikr spokesperson declined to comment.

For HDFC, this deal means that it gets access to the Quikr platform to sell mortgages.

“HDFC’s primary business is lending for home buying. In its larger scheme of things, the broking business is getting irrelevant,” said a person familiar with HDFC’s thinking. “HDFC wants to get leads but more refined ones; that’s why it is looking to enter a partnership with Quikr.”