Frontier Digital Ventures Ltd (ASX:FDV) is buoyed by the news that the parent company of Pakistan’s leading property marketplace, Zameen, has raised US$200 million ahead of an upcoming IPO.
FDV has a significant non-controlling 30% stake in Zameen, whose parent company is Dubai-based Emerging Markets Property Group (EPMG), which has a 70% interest.
EMPG's raise was highly successful and led by US-based growth equity fund Affinity Partners, with new investors including KCK and Acacia Partners, as well as participation from other existing shareholders including Euronext Amsterdam-listed Prosus NV.
Most of the money raised will be put toward EMPG’s businesses in the United Arab Emirates (UAE).
While EMPG’s valuation is yet to be disclosed, the company did note the funding round was completed at a significantly higher valuation than their last funding round in April 2020, which valued the company at more than US$1 billion.
“With this round of investment, EMPG begins a new chapter in its success story. We are on track to double our revenue over the last 24 months while achieving an EBITDA positive position, and we look forward to continuing this strong growth trajectory,” EMPG’s CEO Imran Ali Khan said.
“With the successful closure of this round the company’s focus will now turn towards preparing for an IPO in the near future, which has always been part of our larger vision.”
Increased spotlight on Zameen
FDV expects the IPO to turn a brighter spotlight on Zameen’s strong performances.
“FDV welcomes recent news from Zameen’s parent company, EMPG, in relation to their focus now turning to preparing for an IPO in the near future,” FDV’s founder and CEO Shaun Di Gregorio said.
“This marks the first time EMPG has publicly commented on its ambitions for an IPO, which we expect will increase the spotlight on Zameen, including its ownership structure and valuation. We are supportive of EMPG’s IPO plans, and we look forward to working with them to help facilitate their ambition.
“Zameen was FDV’s first investment in 2014. The business has performed incredibly strongly over this time and we are delighted with the scale and success of the business. An IPO involving Zameen is consistent with FDV’s long-term value creation strategy for shareholders.”
The company’s last internal funding round was conducted at a US$400 million pre-money equity valuation in December 2020, which represented a 100x increase on the US$4 million valuation at the time of FDV’s initial investment.
In that quarter, Zameen recorded revenue of A$12.4 million and EBITDA of A$1.2 million (100% basis).
Since then, the business has continued to perform strongly with a compound quarterly revenue growth rate of approximately 10% each quarter between 1Q 2021 and 3Q 2022 (100% basis).
In FDV’s recent 3Q 2022 results, Zameen reported revenue of A$22.3 million and record EBITDA of A$5.0m (100% basis), increasing 38% and 52% on pcp, respectively. Notably, Zameen continues to experience strong EBITDA margin expansion (+22% in 3Q 2022), while also continuing to be cash flow positive.
FDV growing in LATAM
While EMPG’s news is music to FDV’s ears, the company is also working hard on expanding its footprint in Latin America.
The company recently installed a management team at the FDV LATAM holding company level, designed to unify InfoCasas, Fincaraíz, Encuentra24 and Yapo. This move is expected to accelerate FDV’s ability to unlock the growth potential of the region.
FDV and the FDV LATAM leadership teams are currently co-designing a value creation plan, which in the longer term, considers the potential for a NASDAQ listing of FDV LATAM.
FDV’s portfolio consists of 16 companies, operating across 20 markets in FDV LATAM, FDV Asia and FDV MENA.
FDV works alongside local management teams across property, automotive and general classifieds, providing strategic oversight and operational guidance which leverages the company’s deep classifieds experience and proven track record.
FDV seeks to unlock further monetisation opportunities beyond the typical classifieds revenue, to grow the equity value of its operating companies and realise their full potential.