Online classified business moves begin to get real

Corporate activity appears to be ramping up among Australasian online classified advertising businesses, with suggestions TPG Capital is eyeing Domain Group and Trade Me is contemplating an initial public offering.

Domain Group is the second-largest player in the online real estate sector behind REA Group, which is 61 per cent owned by News Corp, publisher of The Australian [and Stockhead], and working on options for the Australian-listed business is Jefferies Australia.

There has been talk its 60 per cent owner Nine – a publisher, broadcaster and digital media business – is understood to be weighing a move to privatise Domain with help from private equity. However, Nine is yet to appoint a chief executive, so there’s not yet any key decision maker that a private equity firm can negotiate with.

The US-based private equity firm TPG Capital is said to be back looking at the business after it approached the Fairfax board in 2017 with an offer to buy Domain and the key newspaper mastheads for $2.29bn.

This was before making a fully-fledged takeover bid for Fairfax at between $2.7bn and $3.1bn.

After embarking on due diligence, TPG walked away from the publisher of newspaper mastheads including The Age, Sydney Morning Herald and The Australian Financial Review.

Hellman and Friedman lobbed a rival approach, but also did not make a formal offer after conducting due diligence.

Perhaps Hellmann and Friedman is also once again casting its eye over the company.

Previously, New York-based private equity firm Kohlberg Kravis Roberts is understood to have explored a buyout proposal for the $2bn Domain Group.

However, after carrying out an assessment of the online real estate business, it decided against moving forward with an acquisition, instead working together as a partner in its quest to buy Property Exchange Australia, which was up for sale at the time and later listed.

Taking Domain off the listed market could boost performance behind closed doors, without scrutiny.

Nine purchased Fairfax around 2018 in a transaction at the time worth about $2.1bn but before that, in response to Fairfax fielding private equity approaches, it demerged Domain to be a separately listed company and retained 60 per cent.

Domain’s share price is at the same level it was four years ago when demerged, after peaking in 2021 at over $5.

In its latest results for the year to June, Domain reported a 13.1 per cent increase in revenue for the past financial year to $391.1m, while net profit increased by 27.9 per cent, excluding significant items, to $49.4m.

Trade Me to list

Meanwhile, DataRoom understands that Trade Me, New Zealand’s largest online auction and classifieds website, is moving to list on the New Zealand stock exchange in the coming year.

The sales pitch is that the group has been able to absorb price hikes in a market downturn, making the prospect of upside for investors when the market across the Tasman turns around highly likely.

Trade Me was previously owned by Fairfax Media, which is now owned by Nine Entertainment, but was purchased by private equity firm Apax Partners in 2018 for $2.4bn from the listed market in a deal advised by UBS.

Trade Me is New Zealand’s largest auction website, founded in 1999 by entrepreneur Sam Morgan, who sold the operation in 2006 for $NZ700m to Fairfax Media, now part of Nine Entertainment. It was publicly listed by Fairfax as a separate entity in 2011.

The website generates strong earnings from car sales and makes robust income from real estate and job ads.

At the time it was purchased by Apax, each part of the business was run on a separate platform and experts said that Trade Me needed to upgrade its technology.

This article first appeared in The Australian.