Frontier Digital Ventures invests in 2 more classifieds

08 Jun 2017

Kuala Lumpur-headquartered Frontier Digital Ventures (ASX: FDV) invested $3.1 million AUD in auto site AutoDeal (Philippines), and $1.6 million AUD ($1.2 million U.S.) in real estate site Propzy (Vietnam).

Both sites already generate revenue (until recently we called it “monetizing”, but we like “generating revenue” more – editor) and will thus help FDV reach its goal of “building ten businesses with turnovers of $100 million AUD each”.

Patrick Grove, CEO of Catcha Group (photo from his LinkedIn page with thanks)

FDV is listed on the Australian Securities Exchange (ASX) and invests in online classified businesses, which it then runs in partnership with the local entrepreneurs. FDV is backed by Patrick Grove’s Catcha Group. Patrick Grove (photo) is a Southeast Asian entrepreneur and investor.

At AutoDeal, FDV paid $1.5 million AUD in cash, and the balance in FDV shares (valued at $0.55 per share) for what the company called “an initial stake of 33.3 percent” in the new- and used-autos site.

(Here is the full news release.)

FDV undertook to invest another $500,000 AUD in AutoDeal for shares which will take its total holding to 36.84 percent, upon reaching the goal of generating $800,000 in revenue in FY2017.

AutoDeal was founded by Daniel Scott and Chris Franks. They sold their first start-up (Pinoy Auto Trader) to Naspers in 2013 and then launched new-auto site AutoDeal in 2014 (a restraint clause in the Naspers contract probably kept them from starting a used-auto site in competition with Pinoy Auto Trader for a predetermined period – editor.)

AutoDeal was founded with a clear focus on new autos, and is one of the market leaders based on traffic and client numbers, thanks to strong partnerships with both vehicle manufacturers and dealers. Since late-2016, it also has a used-auto section (here).

FDV said AutoDeal receives about 1.7 million visits per month. AutoDeal will leverage FDV’s online classifieds expertise. It has begun to roll out a “version 2.0 online classifieds business model” focused on transactional revenue streams, such as car financing.

At Propzy, FDV paid $1.6 million AUD in cash for a 28.6-percent stake. The cash is payable in two tranches, with the second tranche subject to agreed performance milestones.

FDV invested $1.1 million AUD in cash and agreed to pay another $500,000 AUD if (when) Propzy generates net revenue of $800,000 AUD in FY2017. The investment in Propzy was in line with FDV’s strategy of getting exposure to high-growth, frontier markets. Vietnam has a total population of 92 million with a very high mobile penetration rate.

Propzy established an advantage by focusing on high-quality, qualified and approved real estate agents. The online platform connects the agent with the potential buyer and facilitates the meeting. Upon completion of the transaction, Propzy receives a commission based on the sale value the agent achieved.

From Q1 of 2016 to Q1 of 2017, listings on Propzy sky-rocketed by 440 percent (from a low base – editor), and the average deal value increased by 50 percent in the same period. Strong listings growth in 2017 is expected to drive revenue growth, due to the transaction-focused business model (source of stats: FDV).

The financial numbers of both sites will be consolidated (added into) the FDV accounts.

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Marian Jacob

Marian Jacob is covering South East Asia. Marian worked in marketing and corporate communications for over a decade, covering both internal and external communications. She began her career in professional services, leading up to communications business partnering in various multi-national organizations with progressive cultures. Marian has worked on both global and regional roles within communications. She also provides counsel to companies on strategic communications and marketing opportunities. She was an editor on the Singapore Audit Committee Guidance Committee Handbook for companies.